What changed in this filing

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Item 1. Business

2021-03-15 compared with 2020-04-14 · 676 added, 1157 removed, 8 unchanged (100% of the section changed)

Business - continued

and Overview - continued

we have fifteen full-time compensated employees, including our Chairman of the Board of Directors and Chief Executive Officer

(“CEO”), our President and Chief Financial Officer (“CFO”), and our Chief Medical Officer (“CMO”).

Our non-employee Vice Chairman is currently not a compensated employee of the Company, but is a compensated member of our board

of directors.

Business Model

contrast to pharmaceuticals and other life science technologies, which typically require long and capital-intensive paths to translate

cellular or biochemical processes into commercially-viable therapeutics or diagnostics, we believe that medical devices have the

potential to move much more rapidly from concept to commercialization with significantly less capital investment.

Many commercially

successful medical devices are often elegant solutions to important and prevalent clinical problems.

Most medical device companies,

however, are not structurally or operationally equipped to fulfill this potential.

According to a report by Josh Makower, M.D.,

Consulting Professor of Medicine at Stanford University, the typical medical device company will spend over $31.0 million for

each product under development and take approximately five years to develop and commercialize a product through the FDA’s

510(k) pathway and over $100.0 million and seven or more years through the FDA’s PMA regulatory pathway.

to forming PAVmed, our leadership team established a model to realize this potential in “single-product companies”

by advancing medical device products from concept to commercialization using significantly less capital and time than a typical

medical device company.

When previously applied to single-product venture backed companies, the model utilized a virtual business

PAVmed’s structure enables us to retain the model’s tight focus on capital and time efficiency and the

core elements which drive efficiency, including limited infrastructure and low fixed costs, while taking advantages of the economies

of scale and flexibility inherent in a multi-product company.

Due to this virtual business model, the Company was able to continue

to move its products thru engineering and regulatory development despite the general overall industry slowdown caused by the COVID-19

key element of our model is the project selection process.

We choose projects to develop and commercialize based on characteristics

which contribute to a strong commercial opportunity.

We place a heavy emphasis on medical device products with the potential for

high-margins and high-impact in attractive markets without regard to the target specialty or clinical area.

project selection process begins with the identification of an unmet clinical need.

We seek prevalent medical conditions where

we believe an opportunity exists to advance the care of the patient through improvements in existing technologies or the introduction

of new platform technologies.

In the current healthcare environment, this usually means our products must be less invasive and

more cost effective.

We select projects which we believe have the potential to lessen procedural invasiveness and/or the opportunity

to shift care from the surgical operating room to lower-cost venues such as the interventional suite or the ambulatory setting.

We expect our products to decrease complications, hospital stays, recovery times and indirect costs associated with a patient’s

loss of productivity.

characteristics which impact a project’s commercial opportunity are its technology, regulatory and reimbursement profiles.

We typically select projects with strong intellectual property position, low to moderate technological complexity, low to moderate

manufacturing costs and primarily disposable products do not require significant capital equipment.

of the most important features we consider is the project’s regulatory pathway, both in the U.S.

and internationally.

FDA’s 510(k) pathway requires us to demonstrate our product is safe and substantially equivalent to FDA-cleared predicates.

The FDA’s costlier and more prolonged PMA pathway requires us to demonstrate our product is safe and effective through randomized

clinical studies.

A product which is eligible for the 510(k) pathway will require substantially less capital and time than one

that requires full PMA clearance.

With all our products we are very aggressive about identifying what we believe are the quickest

paths to regulatory clearance, paying very careful attention to selection of the best predicates and references as well as careful

attention to precisely crafting the primary indications for use language.

Although we favor products eligible for the FDA’s

510(k) pathway, with or without clinical safety studies, we may also pursue PMA pathway products with large addressable markets,

or in the case of one of our lead products, PortIO™, pursue classification under section 513(f)(2) of the FDCA, also referred

to as de novo classification, which could be more rigorous than the 510(k) pathway, but generally require substantially

less time and resources than a PMA pathway.

We have a variety of options to commercialize such products more efficiently by initially,

or even exclusively, targeting European or emerging markets which have shorter, less costly regulatory pathways for such projects.

We also attempt to identify narrower applications and indications with lower regulatory hurdles will allow us to start commercializing

our product, while broader applications and indications with higher hurdles move through the regulatory process.

Business - continued

Business Model - continued

project’s reimbursement profile, both in the U.S.

and internationally, is another very important component of the project’s

commercial opportunity.

We prefer projects with existing reimbursement codes, the opportunity to seek reimbursement under higher-value

surgical procedure codes or the potential to seek reimbursement under narrow, product-specific codes as opposed to bundled procedure

and Commercialization Processes

we add a project to our pipeline, we map out development and commercialization processes specifically tailored to the product

seeking to optimize capital and time efficiency and maximize value creation.

The model emphasizes parallel development processes,

such as engineering, quality, regulatory, supply chain, and manufacturing, utilizing outsourced, best-in-class process experts

on an as-needed basis.

We initially select the shortest, most-efficient path to commercialization of a safe and effective first-generation

We then proceed with iterative product development based on real-life product performance and user feedback.

intend to continue to utilize outsourced best-in-class process experts.

We have strong relationships with a network of experts

in design engineering, regulatory affairs, quality systems, supply chain management and manufacturing, including many with highly

specialized skills in areas critical to our current and future pipeline.

We will not be reluctant, however, to in-source certain

heavily utilized process experts when and if we decide such a move will enhance our ability to execute on our strategy.

grow, we expect to maintain a lean management infrastructure while expanding our bandwidth primarily with skilled project managers.

believe our structure will enhance our flexibility to commercialize our products compared to these and other single-product, development-stage

Each of our products generally follow one of three commercialization pathways.

For certain products with one or more

natural strategic acquirers such as PortIO and NextFlo, we may seek an early acquisition of the product prior to or soon after

regulatory clearance, providing us with a source of non-dilutive capital.

For certain groundbreaking products with large market

opportunities such as CarpX and EsoGuard/EsoCheck, we retain the flexibility to fully commercialize our products for the foreseeable

For certain other high-volume, lower sale price products such as DisappEAR, we may seek to co-market them with strategic

partners through sales and distribution agreements.

For products we choose to commercialize ourselves, we may do so through a

network of independent U.S.

medical representatives and/or inventory-stocking distributors.

We eventually may, however, choose

to build (or obtain through a strategic acquisition) our own sales and marketing team, initially utilizing a hybrid model with

national /regional sales management of independent distributors moving towards direct sales as warranted.

As our pipeline grows,

we may choose to jointly commercialize subsets of related products which target certain medical specialties or healthcare locations.

and development expenses are recognized in the period they are incurred and consist principally of internal and external expenses

incurred for the research and development of our products.

We plan to increase our research and development expenses for the foreseeable

future as we continue development of our products Our current research and development activities are focused principally on obtaining

FDA approval and clearance and initializing commercialization of the other lead products in our product portfolio pipeline, such

as EsoGuard IVD, NextFlo, and PortIO, while advancing DisappEAR and glucose monitoring through development.

The research and development

activities on the other portfolio products is commensurate with available sufficient capital resources.

Business - continued

Business Model - continued

Implementation

intend to advance our lead products towards commercialization as quickly and efficiently as possible and expand our product pipeline

by advancing our conceptual phase projects through patent submission and early testing.

we will continue to conceive and develop products internally, as we grow and expand our resources, we intend to expand our pipeline

with innovative products sourced from third parties.

In contrast to pharmaceuticals and other life sciences technologies, medical

device innovation often begins with one, or at most a few, clinicians and/or engineers identifying an unmet clinical need and

proposing a technological solution to address such need.

Many academic medical centers and other large institutions try to aggregate

their intellectual property through technology transfer centers and, more recently, through “innovation”

centers which

do not merely secure and transfer intellectual property, but actually advance projects internally prior to spinning them out for

eventual commercialization.

is our belief, despite these efforts, only a small fraction of the potential pool of intellectual capital (i .e .

of individual clinicians with innovative product ideas) is participating in medical device innovation.

These clinicians rarely

engage in the process for a variety of reasons, including the belief they are too busy, can’t afford to divert time away

from their practice or that the upfront out-of-pocket costs are too great.

Other clinicians believe they lack the knowledge or

connections to successfully navigate the process.

Technology transfer and full-fledged innovation centers have only had modest

success in getting their clinicians to bring them innovative product ideas and even less success getting these products commercialized.

Even centers with extensive resources are usually limited in their ability to advance products beyond the pre-clinical phase and

are dependent on a shrinking pool of early-stage medical device venture capital to bring their products to market.

some technology transfer and innovation centers associated with not-for-profit hospitals, universities, endowments and charitable

organizations may be precluded from directly engaging in commercial sales of medical devices, creating opportunities for us to

commercialize and market their intellectual property.

capital and time efficient model put us in strong position to partner with innovative clinicians and academic medical centers

focusing on medical device innovation.

We have developed a collaboration model focused on licensing technologies for development

and commercialization.

Since our founding, we have been contacted by clinicians and centers inquiring about opportunities to work

with us on developing and commercializing their ideas and technologies.

In November 2016, we signed a definitive licensing agreement

with a group of leading academic institutions, including Tufts University and two Harvard Medical School teaching hospitals –

Massachusetts Eye and Ear Infirmary and Massachusetts General Hospital.

The agreement provides us with an exclusive worldwide

license to develop and commercialize antibiotic-eluting resorbable ear tubes based on a proprietary aqueous silk technology conceived

and developed at these institutions, a product we have initially referred to as DisappEAR.

More recently, in May 2018, we licensed

technologies from Case Western Reserve University for EsoGuard and EsoCheck.

Within the twelve to eighteen months following the

grant date of the license, Lucid Diagnostics Inc., our majority owned subsidiary, achieved FDA 510(k) market clearance for EsoCheck

and launched EsoGuard as an LDT at our contract laboratory in California.

Typical in-license products, once commercialized, provided

for the licensor institution to receive royalties based on revenue, and/or milestone payments, potentially including a portion

of certain additional proceeds from the sale or sublicensing of the technology to a third party.

internally or externally sourced, we seek to maintain balance within our pipeline with shorter-term, lower-risk products which

offer the opportunity for more rapid commercialization, generating revenue to support development of longer-term products.

each product moves through our pipeline from concept to commercialization, we continuously reassess the product’s long-term

commercial potential, balance it against other products in the pipeline and re-allocate resources accordingly.

As such, we expect

to have much greater flexibility to move products through our pipeline based on the actual developments and the overall interests

of our company.

We may accelerate, decelerate, pause or abandon a product and increase or decrease resources applied to a product

based on a variety of factors including available capital, shifts in the regulatory, clinical, market and/or intellectual property

landscape for a particular product, the emergence of one or more products with significantly greater commercial potential, or

any other factor which may impact its long-term commercial potential.

Business - continued

Business Model - continued

Manufacturing

currently have no plans to manufacture our own products because the fixed overhead costs and limited flexibility that come with

owning manufacturing facilities are not consistent with our capital efficient model.

The entire medical device industry, including

many of its largest players, depends heavily on contract manufacturers operating in the United States and abroad.

Medical device

manufacturers are subject to extensive regulation by the FDA and other authorities.

Compliance with these regulations is costly

and particularly onerous on small, development-phase companies.

Contract manufacturers can also take advantage of significant

economies of scale in terms of purchasing, machining, tooling, specialized personnel, sub-contracting or even off-shoring certain

processes to lower-cost operators.

These economies are simply not available to us.

have relationships with many contract manufacturers, including those with specialized skills in several processes important to

We expect them to have sufficient capacity to handle our manufacturing needs and anticipate our growth will be better

served by deploying our resources to expand our pipeline and commercialization efforts.

intend to work closely with our contract manufacturing partners to establish and manage our products’

supply chain, dual

sourcing whenever possible.

We expect to help them design and build our products’

manufacturing lines including subassembly,

assembly, sterilization and packaging and to work closely with them to manage our quality system, to assure compliance with all

regulations and to handle inspections or other queries with regulatory bodies.

Our contract manufacturers have the ability to

add lines and shifts to increase the manufacturing capacity of our products as our demand dictates.

We may ship our products directly

from our contract manufacturers, but we may also choose to utilize third-party regional warehousing and distribution services.

business will depend on our ability to create or acquire proprietary medical device technologies to commercialize.

vigorously protect our proprietary technologies’

intellectual property rights in patents, trademarks and copyrights, as

available through registration in the United States and internationally.

We currently have applied for or own 72 patents across

10 families of products.

Patent protection and other proprietary rights are thus essential to our business.

Our policy is to aggressively

file patent applications to protect our proprietary technologies including inventions and improvements to inventions.

patent protection, as appropriate, on:

product itself including all embodiments with future commercial potential;

methods of using the product;

methods of manufacturing the product.

addition to filing and prosecuting patent applications in the United States, we intend to file counterpart patent applications

in Europe, Canada, Japan, Australia, China and other countries worldwide.

Foreign filings can be cumbersome and expensive, and

we will pursue such filings when we believe they are warranted as we try to balance our international commercialization plans

with our desire to protect the global value of the technology.

term of individual patents depends upon the legal term of the patents in the countries in which they are obtained.

In most countries

in which we file, the patent term is 20 years from the earliest date of filing a non-provisional patent application.

In the United

States, a patent’s term may be shortened if a patent is terminally disclaimed over another patent or as a result of delays

in patent prosecution by the patentee, and a patent’s term may be lengthened by patent term adjustment, which compensates

a patentee for administrative delays by the U.S.

Patent and Trademark Office in granting a patent.

Business - continued

Business Model - continued

Property - continued

May 12, 2018, we entered into a license agreement with Case Western Reserve University (“CWRU”) - the “CWRU

License Agreement”

- wherein we acquired an exclusive worldwide right to use the intellectual property rights to the EsoGuard

and EsoCheck proprietary technology for the detection of changes in the esophagus.

CWRU License Agreement terminates upon the expiration of certain related patents, or on May 12, 2038 in countries where no such

patents exist, or upon expiration of any exclusive marketing rights that have been granted by the FDA or other U.S.

agency, whichever comes later.

The key EsoGuard U.S.

patents begin to expire in August 2024, however, the company is pursuing

applications of the clinical utility to extend the patent protection with more recently filed families of cases that have a twenty

year term and will be set to expire in the mid to late 2030’s once they are issued.

It is noteworthy the accuracy confidence

of the EsoGuard assay has only been tested with cells collected using the EsoCheck Collect + Protect technology.

The key EsoCheck

patents begin to expire in December 2034.

July 2019, the USPTO issued patent number 10,335,189 related to our other commercially available product, CarpX.

Although this

patent does not expire until 2039, we have filed other pending patents which can further expand the protection of our intellectual

property for this minimally-invasive carpal tunnel surgical device.

intend to continuously reassess and fine-tune our intellectual property strategy in order to fortify our position in the United

States and internationally.

Prior to acquiring or licensing a technology from a third party, we will evaluate the existing proprietary

rights, our ability to adequately obtain and protect these rights and the likelihood or possibility of infringement upon competing

rights of others.

will also rely upon trade secrets, know-how, continuing technological innovation, and may rely upon licensing opportunities in

the future, to develop and maintain our competitive position.

We intend to protect our proprietary rights through a variety of

methods, including confidentiality agreements and/or proprietary information agreements with suppliers, employees, consultants,

independent contractors and other entities who may have access to proprietary information.

We will generally require employees

to assign patents and other intellectual property to us as a condition of employment with us.

All of our consulting agreements

will pre-emptively assign to us all new and improved intellectual property that arise during the term of the agreement.

Business - continued

Insurance Coverage and Reimbursement

ability to successfully commercialize our products will depend in part on the extent to which governmental authorities, private

health insurers and other third-party payors provide coverage for and establish adequate reimbursement levels for the procedures

during which our products are used.

the United States, third-party payors continue to implement initiatives that restrict the use of certain technologies to those

that meet certain clinical evidentiary requirements.

In addition to uncertainties surrounding coverage policies, there are periodic

changes to reimbursement.

Third-party payors regularly update reimbursement amounts and also from time to time revise the methodologies

used to determine reimbursement amounts.

This includes annual updates to payments to physicians, hospitals and ambulatory surgery

centers for procedures during which our products are used.

An example of payment updates is the Medicare program’s updates

to hospital and physician payments, which are done on an annual basis using a prescribed statutory formula.

In the past, when

the application of the formula resulted in lower payment, Congress has passed interim legislation to prevent the reductions.

product’s reimbursement profile, both in the U.S.

and internationally, is an important component of the product’s

commercial opportunity.

We prefer projects with existing reimbursement codes, the opportunity to seek reimbursement under higher-value

surgical procedure codes or the potential to seek reimbursement under narrow, product-specific codes as opposed to bundled procedure

For those products that have high strategic value, but with less defined reimbursement, we have engaged reimbursement experts

and support from industry associations to accelerate the acquisition of satisfactory reimbursement levels.

for New Medical Device Innovation

and commercializing new products is highly competitive.

The market is characterized by extensive research and clinical efforts

and rapid technological change.

We face intense competition worldwide from medical device, biomedical technology and medical products

and combination products companies, including major medical products companies.

We may be unable to respond to technological advances

through the development and introduction of new products.

Most of our existing and potential competitors have substantially greater

financial, marketing, sales, distribution, manufacturing and technological resources.

These competitors may also be in the process

of seeking FDA or other regulatory approvals, or patent protection, for new products.

Our competitors may commercialize new products

in advance of our products.

Our products also face competition from numerous existing products and procedures, some of which currently

are considered part of the standard of care.

We believe the principal competitive factors in our markets are:

quality of outcomes for medical conditions;

by surgeons and the medical device market generally;

of use and reliability;

leadership and superiority;

marketing and distribution;

price and qualification for coverage and reimbursement.

will also compete in the marketplace to recruit and retain qualified scientific, management and sales personnel, as well as in

acquiring technologies and licenses complementary to our products or advantageous to our business.

We are aware of several companies

that compete or are developing technologies in our current and future products areas.

In order to compete effectively, our products

will have to achieve market acceptance, receive adequate insurance coverage and reimbursement, be cost effective and be simultaneously

safe and effective.

Business - continued

authorities in the United States, at the federal, state and local level, and in other countries extensively regulate, among other

things, the research, development, testing, manufacture, quality control, approval, labeling, packaging, storage, recordkeeping,

promotion, advertising, distribution, post-approval monitoring and reporting, marketing and export and import of products such

as those we are developing.

The following is a summary of the government regulations applicable to our business.

and future legislative proposals to further reform healthcare or reduce healthcare costs may result in lower reimbursement for

our products, or for the procedures associated with the use of our products, or limit coverage of our products.

The cost containment

measures payors and providers are instituting and the effect of any healthcare reform initiative implemented in the future could

significantly reduce our revenues from the sale of our products.

Alternatively, the shift away from fee-for-service agreements

to capitated payment models may support the value of our products which can be shown to decrease resource utilization and lead

to cost saving - for both payors and providers.

implementation of the Affordable Care Act is an example that has the potential to substantially change healthcare financing and

delivery by both governmental and private insurers can have a significant impact on the pharmaceutical and medical device industries.

an example of Healthcare legislation volatility, the Affordable Care Act imposed, among other things, a new federal excise tax

on the sale of certain medical devices.

The Consolidated Appropriations Act, 2016 (Pub.

114-113), signed into law on Dec.

2015, included a two-year moratorium on the medical device excise tax imposed by Internal Revenue Code section 4191.

the moratorium, the medical device excise tax did not apply to sales of taxable medical devices during the period beginning on

January 1, 2016 and ending on December 31, 2017.

The moratorium expired on Dec.

On January 22, 2018 as part of a stop

gap spending bill, President Trump signed into law a moratorium for an additional two years retroactive to January 1, 2018.

tax was scheduled to go into effect until January 1, 2020.

On December 20, 2019, the U.S.

President signed into law a federal

spending package that permanently repealed the 2.3% medical excise tax.

addition, the ACA implemented payment system reforms including a national pilot program on payment bundling to encourage hospitals,

physicians and other providers to improve the coordination, quality and efficiency of certain healthcare services through bundled

payment models.

In addition, other legislative changes have been proposed and adopted since the Patient Protection and Affordable

Care Act, (“PPACA”) was enacted.

On August 2, 2011, President Obama signed into law the Budget Control Act of 2011,

which, among other things, created the Joint Select Committee on Deficit Reduction to recommend to Congress proposals in spending

The Joint Select Committee did not achieve a targeted deficit reduction of at least $1.2 trillion for the years 2013

through 2021, triggering the legislation’s automatic reduction to several government programs.

This includes reductions

to Medicare payments to providers of 2.0% per fiscal year, which went into effect on April 1, 2013, and will stay in effect through

2024 unless congressional action is taken.

On January 2, 2013, the American Taxpayer Relief Act of 2012 took effect, which, among

other things, reduced Medicare payments to several providers, including hospitals, imaging centers and cancer treatment centers

and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

We expect additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the

amounts federal and state governments will pay for healthcare products and services, which could result in reduced demand for

our products or additional pricing pressure.

Additionally, there is no assurance the PPACA, in whole or in part, will not be repealed

in the future.

Any impact such a repeal would have on the medical device industry remains unclear.

Business - continued

Regulation - continued

products we develop must be cleared by the FDA before they are marketed in the United States.

Before and after approval or clearance

in the United States, our products are subject to extensive regulation by the FDA under the FDCA and/or the Public Health Service

Act, as well as by other regulatory bodies.

FDA regulations govern, among other things, the development, testing, manufacturing,

labeling, safety, storage, recordkeeping, market clearance or approval, advertising and promotion, import and export, marketing

and sales, and distribution of medical devices and products.

the United States, medical devices are subject to varying degrees of regulatory control and are classified in one of three classes

depending on the extent of controls the FDA determines are necessary to reasonably ensure their safety and efficacy:

general controls, such as labeling and adherence to quality system regulations;

special controls, pre-market notification (often referred to as a 510(k) application), specific controls such as performance

standards, patient registries, post-market surveillance, additional controls such as labeling and adherence to quality system

special controls and approval of a PMA application.

general, the higher the classification, the greater the time and cost to obtain approval to market.

There are no “standardized”

requirements for approval, even within each class.

For example, the FDA could grant 510(k) status, but require a human clinical

trial, a typical requirement of a PMA.

They could also initially assign a device Class III status but end up approving a device

as a 510(k) device if certain requirements are met.

The range of the number and expense of the various requirements is significant.

The quickest and least expensive pathway would be 510(k) approval with just a review of existing data.

The longest and most expensive

path would be a PMA with extensive randomized human clinical trials.

We cannot predict how the FDA will classify our products,

nor predict what requirements will be placed upon us to obtain market approval, or even if they will approve our products at all.

request marketing authorization by means of a 510(k) clearance, we must submit a pre-market notification demonstrating the proposed

device is substantially equivalent to another currently legally marketed medical device, has the same intended use, and is as

safe and effective as a currently legally marketed device and does not raise different questions of safety and effectiveness than

does a currently legally marketed device.

510(k) submissions generally include, among other things, a description of the device

and its manufacturing, device labeling, medical devices to which the device is substantially equivalent, safety and biocompatibility

information, and the results of performance testing.

In some cases, a 510(k) submission must include data from human clinical

Marketing may commence only when the FDA issues a clearance letter finding substantial equivalence.

After a device receives

510(k) clearance, any product modification that could significantly affect the safety or effectiveness of the product, or would

constitute a significant change in intended use, requires a new 510(k) clearance or, if the device would no longer be substantially

equivalent, would require PMA, or possibly, a de novo pathway under section 513(f)2 of the FDCA.

In addition, any additional claims

the Company wished to make at a later date may require a PMA.

If the FDA determines the product does not qualify for 510(k) clearance,

they will issue a Not Substantially Equivalent letter, at which point the Company must submit and the FDA must approve a PMA or

issue premarket clearance using the de novo before marketing can begin.

1997, the Food and Drug Administration Modernization Act (FDAMA) added the de novo classification pathway under section 513(f)(2)

of the FD&C Act, establishing an alternate pathway to classify new devices into Class I or II that had automatically been

placed in Class III after receiving a Not Substantially Equivalent (NSE) determination in response to a 510(k) submission.

this process, a sponsor who receives an NSE determination may, within 30 days of receiving notice of the NSE determination, request

FDA to make a risk-based classification of the device under section 513(a)(1) of the Act.

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Regulation - continued

2012, section 513(f)(2) of the FD&C Act was amended by section 607 of the Food and Drug Administration Safety and Innovation

Act (FDASIA), to provide a second option for de novo classification.

In this second pathway, a sponsor who determines there is

no legally marketed device upon which to base a determination of substantial equivalence may request FDA to make a risk-based

classification of the device under section 513(a)(1) of the Act without first submitting a 510(k).

the review of a 510(k) submission, the FDA may request more information or additional studies and may decide the indications for

which we seek approval or clearance should be limited.

In addition, laws and regulations and the interpretation of those laws

and regulations by the FDA may change in the future.

We cannot foresee what effect, if any, such changes may have on us.

Regulations will continue to change and evolve including the 2016-21st Century Cures Act which mandated the creation and revision

of policies and processes intended to speed patient access to new medical devices and codifying into law the FDA’s expedited

review program for breakthrough devices for which EsoGuard was so designated.

In 2017, the Food and Drug Administration Reauthorization

Act (FDARA) which included improvements to premarket review times and investments in strategic initiatives like the National Evaluation

System for health Technology (NEST) and patient input and decoupling accessory classification from classification of the parent

We must continue to be aware of these changes that possibly impact our development and commercialization work.

has a network of professionals with extensive experience in these matters that advise us on both the pre-approval/clearance requirements

as well as the post market surveillance compliance obligations.

Trials of Medical Devices

or more clinical trials may be necessary to support an FDA submission.

Clinical studies of unapproved or uncleared medical devices

or devices being studied for uses for which they are not approved or cleared (investigational devices) must be conducted in compliance

with FDA requirements.

If an investigational device could pose a significant risk to patients, the sponsor company must submit

an Investigational Device Exemption, or IDE application to the FDA prior to initiation of the clinical study.

An IDE application

must be supported by appropriate data, such as animal and laboratory test results, showing it is safe to test the device on humans

and the testing protocol is scientifically sound.

The IDE will automatically become effective 30 days after receipt by the FDA

unless the FDA notifies the company the investigation may not begin.

Clinical studies of investigational devices may not begin

until an institutional review board (“IRB”) has approved the study.

any study, the sponsor must comply with the FDA’s IDE requirements.

These requirements include investigator selection, trial

monitoring, adverse event reporting, and record keeping.

The investigators must obtain patient informed consent, rigorously follow

the investigational plan and study protocol, control the disposition of investigational devices, and comply with reporting and

record keeping requirements.

We, the FDA, or the IRB at each institution at which a clinical trial is being conducted may suspend

a clinical trial at any time for various reasons, including a belief the subjects are being exposed to an unacceptable risk.

the approval or clearance process, the FDA typically inspects the records relating to the conduct of one or more investigational

sites participating in the study supporting the application.

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Regulation - continued

Post-Approval

Regulation of Medical Devices

a device is cleared or approved for marketing, numerous and pervasive regulatory requirements continue to apply.

These include:

FDA Quality Systems Regulation (QSR), which governs, among other things, how manufacturers design, test manufacture, exercise

quality control over, and document manufacturing of their products;

and claims regulations, which prohibit the promotion of products for unapproved or “off-label”

uses and impose

other restrictions on labeling;

Medical Device Reporting regulation, which requires reporting to the FDA of certain adverse experience associated with use

of the product.

will continue to be subject to inspection by the FDA to determine our compliance with regulatory requirements.

Manufacturing

cGMP Requirements

Manufacturers

of medical devices are required to comply with FDA manufacturing requirements contained in the FDA’s current Good Manufacturing

Practices (cGMP) set forth in the quality system regulations promulgated under section 520 of the FDCA.

cGMP regulations require,

among other things, quality control and quality assurance as well as the corresponding maintenance of records and documentation.

Failure to comply with statutory and regulatory requirements subjects a manufacturer to possible legal or regulatory action, including

the seizure or recall of products, injunctions, consent decrees placing significant restrictions on or suspending manufacturing

operations, and civil and criminal penalties.

Adverse experiences with the product must be reported to the FDA and could result

in the imposition of marketing restrictions through labeling changes or in product withdrawal.

Product approvals may be withdrawn

if compliance with regulatory requirements is not maintained or if problems concerning safety or efficacy of the product occur

following the approval.

We expect to use contract manufacturers to manufacture our products for the foreseeable future we will

therefore be dependent on their compliance with these requirements to market our products.

We work closely with our contract manufacturers

to assure our products are in strict compliance with these regulations.

addition to FDA restrictions on marketing and promotion of drugs and devices, other federal and state laws restrict our business

These laws include, without limitation, anti-kickback and false claims laws, data privacy and security laws, as well

as transparency laws regarding payments or other items of value provided to healthcare providers.

of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available under such laws, it is

possible some of our business activities, including certain sales and marketing practices and the provision of certain items and

services to our customers, could be subject to challenge under one or more of such laws.

If our operations are found to be in

violation of any of the health regulatory laws described above or any other laws that apply to us, we may be subject to penalties,

including potentially significant criminal and civil and administrative penalties, damages, fines, disgorgement, imprisonment,

exclusion from participation in government healthcare programs, contractual damages, reputational harm, administrative burdens,

diminished profits and future earnings, and the curtailment or restructuring of our operations, any of which could adversely affect

our ability to operate our business and our results of operations.

To the extent any of our products are sold in a foreign country,

we may be subject to similar foreign laws, which may include, for instance, applicable post-marketing requirements, including

safety surveillance, anti-fraud and abuse laws and implementation of corporate compliance programs and reporting of payments or

transfers of value to healthcare professionals.

Business - continued

Regulation - continued

Payment Sunshine Act

has been a recent trend of increased federal and state regulation of payments and transfers of value provided to healthcare professionals

On February 8, 2013, the Centers for Medicare & Medicaid Services, or CMS, released its final rule implementing

section 6002 of the Affordable Care Act known as the Physician Payment Sunshine Act that imposes new annual reporting requirements

on device manufacturers for payments and other transfers of value provided by them, directly or indirectly, to physicians and

teaching hospitals, as well as ownership and investment interests held by physicians and their family members.

A manufacturer’s

failure to submit timely, accurately and completely the required information for all payments, transfers of value or ownership

or investment interests may result in civil monetary penalties of up to an aggregate of $150,000 per year, and up to an

aggregate of 

$1 million per year for “knowing failures.”

Manufacturers that produces at least one product

reimbursed by Medicare, Medicaid, or Children’s Health Insurance Program and (i) if the product is a drug or biological,

and it requires a prescription (or physician’s authorization) to administer;

or (ii) if the product is a device or medical

supply, and it requires premarket approval or premarket notification by the FDA are required to comply with the Open Payments

(commonly referred to as the Sunshine Act) filing requirements under CMS.

We currently do not have any products covered by Medicare,

Medicaid, or Children’s Health Insurance Program as none of our products have premarket approval or clearance notification.

We expect once our products receive regulatory clearance, we will be required to comply with the Sunshine Act provisions.

states, such as California and Connecticut, also mandate implementation of commercial compliance programs, and other states, such

as Massachusetts and Vermont, impose restrictions on device manufacturer marketing practices and require tracking and reporting

of gifts, compensation and other remuneration to healthcare professionals and entities.

The shifting commercial compliance environment

and the need to build and maintain robust and expandable systems to comply with different compliance or reporting requirements

in multiple jurisdictions increase the possibility a healthcare company may fail to comply fully with one or more of these requirements.

Anti-Kickback Statute

Federal Anti-Kickback Statute prohibits, among other things, knowingly and willfully offering, paying, soliciting or receiving

any remuneration (including any kickback, bribe or rebate), directly or indirectly, overtly or covertly, to induce or in return

for purchasing, leasing, ordering or arranging for or recommending the purchase, lease or order of any good, facility, item or

service reimbursable, in whole or in part, under Medicare, Medicaid or other federal healthcare programs.

The term “remuneration”

has been broadly interpreted to include anything of value.

Although there are a number of statutory exceptions and regulatory

safe harbors protecting some common activities from prosecution, the exceptions and safe harbors are drawn narrowly.

that involve remuneration that may be alleged to be intended to induce prescribing, purchases or recommendations may be subject

to scrutiny if they do not qualify for an exception or safe harbor.

Failure to meet all of the requirements of a particular applicable

statutory exception or regulatory safe harbor does not make the conduct per se illegal under the Anti-Kickback Statute.

the legality of the arrangement will be evaluated on a case-by-case basis based on a cumulative review of all its facts and circumstances.

Several courts have interpreted the statute’s intent requirement to mean if any one purpose of an arrangement involving

remuneration is to induce referrals of federal healthcare covered business, the Anti-Kickback Statute has been violated.

Additionally,

the intent standard under the Anti-Kickback Statute was amended by the Patient Protection and Affordable Care Act of 2010, as

amended by the Health Care and Education Reconciliation Act of 2010, collectively the Affordable Care Act, to a stricter standard

such that a person or entity no longer needs to have actual knowledge of the statute or specific intent to violate it in order

to have committed a violation.

In addition, the Affordable Care Act codified case law that a claim including items or services

resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal

civil False Claims Act.

Business - continued

Regulation - continued

False Claims Act

False Claims Act prohibits, among other things, any person or entity from knowingly presenting, or causing to be presented, a

false or fraudulent claim for payment or approval to the federal government or knowingly making, using or causing to be made or

used a false record or statement material to a false or fraudulent claim to the federal government.

A claim includes “any

request or demand”

for money or property presented to the U.S.

The False Claims Act also applies to false submissions

that cause the government to be paid less than the amount to which it is entitled, such as a rebate.

Intent to deceive is not

required to establish liability under the False Claims Act.

Several pharmaceutical, device and other healthcare companies have

been prosecuted under these laws for, among other things, allegedly providing free product to customers with the expectation the

customers would bill federal programs for the product.

Other companies have been prosecuted for causing false claims to be submitted

because of the companies’

marketing of products for unapproved, and thus non-covered uses.

government may further prosecute, as a crime, conduct constituting a false claim under the False Claims Act.

The False Claims

Act prohibits the making or presenting of a claim to the government knowing such claim to be false, fictitious, or fraudulent

and, unlike civil claims under the False Claims Act, requires proof of intent to submit a false claim.

Foreign Corrupt Practices Act

Foreign Corrupt Practices Act, or the FCPA, prohibits any U.S.

individual or business from paying, offering, or authorizing payment

or offering of anything of value, directly or indirectly, to any foreign official, political party or candidate for the purpose

of influencing any act or decision of the foreign entity in order to assist the individual or business in obtaining or retaining

The FCPA also obligates companies whose securities are listed in the United States to comply with accounting provisions

requiring the company to maintain books and records that accurately and fairly reflect all transactions of the corporation, including

international subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international operations.

Activities that violate the FCPA, even if they occur wholly outside the United States, can result in criminal and civil fines,

imprisonment, disgorgement, oversight, and debarment from government contracts.

Business - continued

International

order to market any product outside of the United States, we would need to comply with numerous and varying regulatory requirements

of other countries and jurisdictions regarding quality, safety and efficacy and governing, among other things, clinical trials,

marketing authorization, commercial sales and distribution of our products.

We may be subject to regulations and product registration

requirements in the areas of product standards, packaging requirements, labeling requirements, import and export restrictions

and tariff regulations, duties and tax requirements.

Whether or not we obtain FDA approval for a product, we would need to obtain

the necessary approvals by the comparable foreign regulatory authorities before we can commence clinical trials or marketing of

the product in foreign countries and jurisdictions.

The time required to obtain clearance required by foreign countries may be

longer or shorter than required for FDA clearance, and requirements for licensing a product in a foreign country may differ significantly

from FDA requirements.

European Union or EU will require a CE mark certification or approval in order to market our products in the various countries

of the European Union or other countries outside the United States.

To obtain CE mark certification of our products, we will be

required to work with an accredited European notified body organization to determine the appropriate documents required to support

certification in accordance with existing medical device directive.

The predictability of the length of time and cost associated

with such a CE mark may vary or may include lengthy clinical trials to support such a marking.

Once the CE mark is obtained, we

may market our product in the countries of the EU.

The new European Medical Device Regulation (EU MDR 2017/745) which was scheduled

to go into effect on May 26, 2020 has been extended by one year to May 26, 2021.

The EU MDR imposes strict new requirements on

medical device companies marketing their products in Europe.

As such, many device companies have been scrambling to renew existing

CE certificates granted under the Medical Devices Directive (MDD 93/42/EEC).

Notified Bodies are now focused on their current

customers and those customers’

current devices making it virtually impossible to submit a new MDD application before May

Good Manufacturing Practices

the European Union, the manufacture of medical devices is subject to good manufacturing practice (GMP), as set forth in the relevant

laws and guidelines of the European Union and its member states.

Compliance with GMP is generally assessed by the competent regulatory

Typically, quality system evaluation is performed by a Notified Body, which also recommends to the relevant competent

authority for the European Community CE Marking of a device.

The Competent Authority may conduct inspections of relevant facilities,

and review manufacturing procedures, operating systems and personnel qualifications.

In addition to obtaining approval for each

product, in many cases each device manufacturing facility must be audited on a periodic basis by the Notified Body.

Further inspections

may occur over the life of the product.

Business - continued

we have twenty five full-time compensated employees, inclusive of our of Chairman of the Board of Directors and Chief Executive

Officer (“CEO”), our President and Chief Financial Officer (“CFO”), and our Chief Medical Officer (“CMO”)

(with each comprising our named executive officers)..

No employees are covered by a collective bargaining agreement.

We consider our relationship with our employees to

our relationship with our employees to be good.

were incorporated on June 26, 2014 in the State of Delaware, under the name PAXmed Inc.

1 unchanged sentence

to PAVmed Inc.

principal business address is One Grand Central Place, Suite 4600, 60 East 42nd Street, New York, New York 10165, and our main

telephone number is (212) 949-4319.

founders include three accomplished medical device entrepreneurs:

corporate address is One Grand Central Place, Suite 4600, 60 East 42nd Street, New York, New York 10165, and our main telephone

number is (212) 949-4319.

founders include three accomplished medical device entrepreneurs including:

Lishan Aklog M.D., Michael J.

Glennon, and Brian J.

In 2007, they founded Pavilion Holdings Group (“PHG”), a medical device holding company with a vision to create

innovative single-product medical device companies using an outsourced business model focused on capital efficiency and speed

Two years later PHG formed Pavilion Medical Innovations (“PMI”), a venture-backed medical device incubator.

Glennon, and Dr.

deGuzman, M.D.

In 2007, they founded Pavilion Holdings Group (“PHG”), a medical device holding company with

a vision to create innovative single-product medical device companies using an outsourced business model focused on capital efficiency

and speed to market.

Two years later PHG formed Pavilion Medical Innovations (“PMI”), a venture-backed medical device

Between 2008 and 2013, PHG and PMI founded four distinct, single-product medical device companies, three of which commercialized

products and one of which was acquired, each as discussed below.

Medical Inc., founded in 2008 with $3.5 million in capital, created the AngioVac system, designed to remove large volume clots

and other undesirable intravascular material without the need for open surgery.

It received its initial FDA clearance 16 months

after the company was founded.

AngioVac was commercially launched in 2009 and the first AngioVac procedure was performed at Harvard’s

Brigham and Women’s Hospital later the same year.

Vortex Medical marketed the AngioVac system across the United States until

it was acquired in October 2012 by AngioDynamics Inc.

ANGO) for $55.0 million in guaranteed consideration.

of its acquisition the company was cash-flow positive, carried no debt and did not require any additional capital beyond original

$3.5 million raised.

Medical Inc., spun out of PMI in 2013 with $3.0 million in initial capital, created the VenaPax next-generation endoscopic vessel

harvest device for use during coronary artery bypass surgery, which received FDA clearance in 18 months after the company was

VenaPax was first commercialized at Harvard’s Massachusetts General Hospital in late 2014.

VenaPax is currently

being marketed across the United States.

Medsystems Inc., spun out of PMI in 2013 with $2.5 million in capital, created a novel peripheral chronic total occlusion (CTO)

device for use in peripheral arterial disease, which received its initial FDA 510(k) clearance in late 2015, and was first commercialized

in May 2016, and is currently being marketed across the United States.

was founded to adapt this model to a multi-product company with access to public capital markets.

We believe this model allows

us to conceive, develop and commercialize our pipeline of medical device products using significantly less capital and time than

a typical medical device company, and provide a streamlined pathway to incorporate outside innovations.

make available free of charge through our website our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports

on Form 8-K and amendments to those reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange

Act of 1934, as amended, or the “Exchange Act.”

We make these reports available through our website as soon as reasonably

practicable after we electronically file such reports with, or furnish such reports to the SEC.

We also make available, free of

charge on our website, the reports filed with the SEC by our executive officers, directors and 10% stockholders pursuant to Section

16 under the Exchange Act as soon as reasonably practicable after copies of those filings are provided to us by those persons.

The public also may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street,

NE., Washington, DC 20549, on official business days during the hours of 10 a.m.

The public may obtain information on

the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330.

The SEC also maintains an Internet site

(http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding us that we file

electronically with the SEC.

website address is http://www.pavmed.com.

products and one of which was acquired.

was founded to be a multi-product company with access to public capital markets.

We believe this model allows us to conceive,

develop and commercialize our pipeline of laboratory developed tests, diagnostic devices and services, and medical device products

based on a model of efficient capital investment and time-to-market, as well as provide a pathway to incorporate outside innovations.

make available free of charge through our website - www.pavmed.com - our periodic reports and registration statements filed

with the United States Securities and Exchange Commission (“SEC”), including our Annual Report on Form 10-K, Quarterly

Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Sections 13(a)

and 15(d) of the Securities Exchange Act of 1934, as amended, or the “Exchange Act.”

We make these reports available

through our website as soon as reasonably practicable after we electronically file such reports with, or furnish such reports

also make available, free of charge on our website, the reports filed with the SEC by our named executive officers, directors,

and 10% stockholders pursuant to Section 16 under the Exchange Act as soon as reasonably practicable after those filings are provided

to us by those persons.

The public also may read and copy any materials we file with the SEC at the SEC’s Public Reference

Room at 100 F Street, NE., Washington, DC 20549, on official business days during the hours of 10 a.m.

The public may

obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330.

The SEC also maintains

an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding

us that we file electronically with the SEC.

website address is www.pavmed.com .

The content of our website is not incorporated by reference into this Annual Report

on Form 10-K, nor in any other report or document we file with the SEC, and any reference to our website are intended to be inactive

textual references only.

1A, Risk Factors

following risk factors and other information included in this Annual Report on Form 10-K should be carefully considered.

and uncertainties described below are not the only ones we face.

Additional risks and uncertainties not presently known to us

or we presently deem less significant may also impair our business operations.

If any of the following risks occur, our business,

financial condition, results of operations and future growth prospects could be materially and adversely affected.

Related to Financial Position and Capital Resources

have incurred operating losses since our inception and may not be able to achieve profitability.

have incurred net losses since our inception.

date, since our inception in June 2014, we have financed our operations principally through issuances of common stock, preferred

stock, warrants, and debt, in both private placements and underwritten public offerings of our securities.

Our ability to generate

sufficient revenue from any of our products in development, and to transition to profitability and generate consistent positive

cash flows is dependent upon factors that may be outside of our control.

We expect our operating expenses will continue to increase

as we continue to build our commercial infrastructure, develop, enhance and commercialize new products and incur additional operational

and reporting costs associated with being a public company.

As a result, we expect to continue to incur operating losses for the

foreseeable future.

have concluded there is substantial doubt of our ability to continue as a going concern and our independent registered public

accounting firm’s report on our financial statements contains an explanatory paragraph describing our ability to continue

as a going concern.

our December 31, 2019 consolidated financial statements, we have concluded and stated our recurring losses from operations, recurring

cash flows used in operations, accumulated deficit, and the requirement to raise additional capital to support our operating and

capital expenditures, raise substantial doubt regarding our ability to continue as a going concern.

Correspondingly, our independent

registered public accounting firm’s report on our consolidated financial statements also includes an explanatory paragraph

expressing substantial doubt about our ability to continue as a going concern.

Our plans to address this going concern risk include,

pursuing additional offerings of debt and/or equity securities.

The consolidated financial statements do not include any adjustments

might result from our inability to consummate such offerings or our ability to continue as a going concern.

Moreover, there is

no assurance if we consummate additional offerings, we will raise sufficient proceeds in such offerings to pay our financial obligations

as they become due.

These factors raise substantial doubt about our ability to continue as a going concern.

may need substantial additional funding and may be unable to raise capital when needed, which could force us to delay, reduce,

eliminate or abandon growth initiatives or product development programs.

intend to continue to make investments to support our business growth.

Because we have not generated any revenue or cash flow

to date, we will require additional funds to:

our research and development;

pursue clinical

our intellectual property rights or defend, in litigation or otherwise, any claims we infringe third-party patents or other

intellectual property rights;

our operations;

our new products, if any such products receive regulatory clearance or approval for commercial sale;

market acceptance of our products;

and expand our sales, marketing and distribution capabilities;

in businesses, products and technologies, although we currently have no commitments or agreements relating to do so.

we do not have, or are not able to obtain, sufficient funds, we may have to delay product development initiatives or license to

third parties the rights to commercialize products or technologies we would otherwise seek to market.

We also may have to reduce

marketing, customer support or other resources devoted to our products.

1A Risk Factors - continued

Associated with Our Business

we have a limited operating history, and have not generated any revenues, you will have little basis upon which to evaluate our

ability to achieve our business objective.

we have a limited operating history, and have not generated any revenues, you will have little basis upon which to evaluate our

ability to achieve our business objective.

We are subject to all of the problems, expenses, delays and other risks inherent in

any new business, as well as problems inherent in establishing a name and business reputation.

markets in which we operate are highly competitive, and we may not be able to effectively compete against other providers of medical

devices, particularly those with greater resources.

face intense competition from companies with dominant market positions in the medical device industry.

These competitors have

significantly greater financial, technical, marketing and other resources than we have and may be better able to:

to new technologies or technical standards;

to changing customer requirements and expectations;

other companies to gain new technologies or products may displace our products;

market and sell products;

prosecute, enforce and defend patents and other intellectual property;

resources to the development, production, promotion, support and sale of products;

a broad range of competitive products at lower prices.

expect competition in the markets in which we participate to continue to increase as existing competitors improve or expand their

product offerings.

future performance will depend on the success of products we have not yet developed.

is an important component of our business and growth strategy, and our success depends on the development, implementation and

acceptance of our products.

To date, only our EsoCheck and EsoGuard products have reached the marketing stage.

Commitments to

develop new products must be made well in advance of any resulting sales, and technologies and standards may change during development,

potentially rendering our products outdated or uncompetitive before their introduction.

Our ability to develop products to meet

evolving industry requirements and at prices acceptable to our customers will be significant factors in determining our competitiveness.

We may expend considerable funds and other resources on the development of our products without any guarantee these products will

be successful.

If we are not successful in bringing one or more products to market, whether because we fail to address marketplace

demand, fail to develop viable technologies or otherwise, we may not generate any revenues and our results of operations could

be seriously harmed.

products may never achieve market acceptance.

date, we have not generated any revenues.

Our ability to generate revenues from product sales and to achieve profitability will

depend upon our ability to successfully commercialize our products.

Because we only recently began to market our first products

for sale, we have no basis to predict whether any of our products will achieve market acceptance.

A number of factors may limit

the market acceptance of any of our products, including:

timing of regulatory approvals of our products and market entry compared to competitive products;

effectiveness of our products, including any potential side effects, as compared to alternative treatments;

rate of adoption of our products by hospitals, doctors and nurses and acceptance by the health care community;

product labeling or product inserts required by regulatory authorities for each of our products;

competitive features of our products, including price, as compared to other similar products;

availability of insurance or other third-party reimbursement, such as Medicare, for patients using our products;

extent and success of our marketing efforts and those of our collaborators;

publicity concerning our products or similar products.

1A Risk Factors - continued

Associated with Our Business - continued

products we may develop may become subject to unfavorable pricing regulations, third-party reimbursement practices or healthcare

reform initiatives, thereby harming our business.

regulations that govern marketing approvals, pricing and reimbursement for new products vary widely from country to country.

countries require approval of the sale price of a product before it can be marketed.

In many countries, the pricing review period

begins after marketing approval is granted.

In some foreign markets, pricing remains subject to continuing governmental control

even after initial approval is granted.

As a result, we might obtain regulatory approval for a product in a particular country,

but then be subject to price regulations that delay our commercial launch of the product and negatively impact the revenue we

are able to generate from the sale of the product in that country.

Adverse pricing limitations may hinder our ability to recoup

our investment in one or more other products we may develop, even if our other products we may develop obtain regulatory approval.

ability to commercialize any products we may develop successfully also will depend in part on the extent to which reimbursement

for these products and related treatments becomes available from government health administration authorities, private health

insurers and other organizations.

Government authorities and third-party payors, such as private health insurers and health maintenance

organizations, decide which treatments they will pay for and establish reimbursement levels.

A primary trend in the U.S.

industry and elsewhere is cost containment.

Government authorities and these third-party payors have attempted to control costs

by limiting coverage and the amount of reimbursement for particular treatments.

We cannot be sure reimbursement will be available

for any product we commercialize and, if reimbursement is available, what the level of reimbursement will be.

Reimbursement may

impact the demand for, or the price of, any product for which we obtain marketing approval.

If reimbursement is not available

or is available only to limited levels, we may not be able to successfully commercialize any product we successfully develop.

eligibility for reimbursement does not imply any product will be paid for in all cases or at a rate that covers our costs, including

research, development, manufacture, sale and distribution.

Payment rates may vary according to the use of the product and the

clinical setting in which it is used, may be based on payments allowed for lower cost products that are already reimbursed and

may be incorporated into existing payments for other services.

Net prices for products may be reduced by mandatory discounts or

rebates required by government healthcare programs or private payors and by any future relaxation of laws that presently restrict

imports of products from countries where they may be sold at lower prices than in the U.S.

Third-party payors often rely upon

Medicare coverage policy and payment limitations in setting their own reimbursement policies.

Our inability to promptly obtain

coverage and profitable payment rates from both government funded and private payors could have a material adverse effect on our

operating results, our ability to raise capital needed to commercialize products and our overall financial condition.

reimbursement or pricing approval in some countries, we may be required to conduct a clinical trial that compares the cost-effectiveness

of our product to other available therapies.

Our business could be materially harmed if reimbursement of any products we may develop,

if any, is unavailable or limited in scope or amount or if pricing is set at unsatisfactory levels.

1A Risk Factors - continued

Associated with Our Business - continued

products we may develop may cause serious adverse side effects or even death or have other properties that could delay or prevent

their regulatory approval, limit the commercial desirability of an approved label or result in significant negative consequences

following any marketing approval.

risk of failure of clinical development is high.

It is impossible to predict when or if any products we may develop will prove

safe enough to receive regulatory approval.

Undesirable side effects caused by any products we may develop could cause us or regulatory

authorities to interrupt, delay or halt clinical trials.

They could also result in a more restrictive label or the delay or denial

of regulatory approval by the FDA or other comparable foreign regulatory authority.

Additionally,

after receipt of marketing approval of any products we may develop, if we or others later identify undesirable side effects or

even deaths caused by such product, a number of potentially significant negative consequences could result, including:

may be forced to recall such product and suspend the marketing of such product;

authorities may withdraw their approvals of such product;

authorities may require additional warnings on the label that could diminish the usage or otherwise limit the commercial success

of such products;

FDA or other regulatory bodies may issue safety alerts, Dear Healthcare Provider letters, press releases or other communications

containing warnings about such product;

FDA may require the establishment or modification of Risk Evaluation Mitigation Strategies or a comparable foreign regulatory

authority may require the establishment or modification of a similar strategy that may, for instance, restrict distribution

of our products and impose burdensome implementation requirements on us;

may be required to change the way the product is administered or conduct additional clinical trials;

could be sued and held liable for harm caused to subjects or patients;

may be subject to litigation or product liability claims;

reputation may suffer.

of these events could prevent us from achieving or maintaining market acceptance of the particular product.

liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of any products that

we may develop.

face an inherent risk of product liability exposure related to the sale of any products we may develop.

The marketing, sale and

use of any products we may develop could lead to the filing of product liability claims against us if someone alleges product

failures, product malfunctions, manufacturing flaws, or design defects, resulted in injury to patients.

We may also be subject

to liability for a misunderstanding of, or inappropriate reliance upon, the information we provide.

If we cannot successfully

defend ourselves against claims that any product, we may develop caused injuries, we may incur substantial liabilities.

of merit or eventual outcome, liability claims may result in:

demand for our products;

to our reputation and significant negative media attention;

of patients from clinical studies or cancellation of studies;

costs to defend the related litigation and distraction to our management team;

monetary awards to patients;

inability to commercialize any products that we may develop.

addition, insurance coverage is increasingly expensive.

We may not be able to maintain insurance coverage at a reasonable cost

or in an amount adequate to satisfy any liability that may arise.

1A Risk Factors - continued

Associated with Our Business - continued

may not be able to protect or enforce our intellectual property rights, which could impair our competitive position.

success depends significantly on our ability to protect our rights to the patents, trademarks, trade secrets, copyrights and all

the other intellectual property rights used, or expected to be used, in our products.

Protecting intellectual property rights

is costly and time consuming.

We rely primarily on patent protection and trade secrets, as well as a combination of copyright

and trademark laws and nondisclosure and confidentiality agreements to protect our technology and intellectual property rights.

However, these legal means afford only limited protection and may not adequately protect our rights or permit us to gain or maintain

any competitive advantage.

Despite our intellectual property rights practices, it may be possible for a third party to copy or

otherwise obtain and use our technology without authorization, develop similar technology independently or design around our patents.

cannot be assured that any of our pending patent applications will result in the issuance of a patent to us.

Trademark Office, or PTO, may deny or require significant narrowing of claims in our pending patent applications, and patents

issued as a result of the pending patent applications, if any, may not provide us with significant commercial protection or be

issued in a form that is advantageous to us.

We could also incur substantial costs in proceedings before the PTO.

may be issued to or licensed by us in the future may expire or may be challenged, invalidated or circumvented, which could limit

our ability to stop competitors from marketing related technologies.

Upon expiration of our issued or licensed patents, we may

lose some of our rights to exclude others from making, using, selling or importing products using the technology based on the

expired patents.

There is no assurance that competitors will not be able to design around our patents.

we may not be able to obtain patent protection or secure other intellectual property rights in all the countries in which we operate,

and under the laws of such countries, patents and other intellectual property rights may be unavailable or limited in scope.

any of our patents fails to protect our technology, it would make it easier for our competitors to offer similar products.

trade secrets may be vulnerable to disclosure or misappropriation by employees, contractors and other persons.

Any inability on

our part to adequately protect our intellectual property may have a material adverse effect on our business, financial condition

and results of operations.

also rely on unpatented proprietary technology.

We cannot assure you that we can meaningfully protect all our rights in our unpatented

proprietary technology or that others will not independently develop substantially equivalent proprietary products or processes

or otherwise gain access to our unpatented proprietary technology.

We seek to protect our know-how and other unpatented proprietary

technology, as trade secrets or otherwise, with confidentiality agreements and/or intellectual property assignment agreements

with our team members, independent distributors and consultants.

However, such agreements may not be enforceable or may not provide

meaningful protection for our proprietary information in the event of unauthorized use or disclosure or other breaches of the

agreements or in the event that our competitors discover or independently develop similar or identical designs or other proprietary

Our trade secrets may be vulnerable to disclosure or misappropriation by employees, contractors and other persons.

addition, we intend to rely on the use of registered and common law trademarks with respect to the brand names of some of our

Common law trademarks provide less protection than registered trademarks.

Loss of rights in our trademarks could adversely

affect our business, financial condition and results of operations.

1A Risk Factors - continued

Associated with Our Business - continued

may be subject to intellectual property infringement claims by third parties which could be costly to defend, divert management’s

attention and resources, and may result in liability.

medical device industry is characterized by vigorous protection and pursuit of intellectual property rights.

Companies in the

medical device industry have used intellectual property litigation to gain a competitive advantage in the marketplace.

to time, third parties may assert against us their patent, copyright, trademark and other intellectual property rights relating

to technologies that are important to our business.

Searching for existing intellectual property rights may not reveal important

intellectual property and our competitors may also have filed for patent protection, which is not publicly-available information,

or claimed trademark rights that have not been revealed through our availability searches.

We may be subject to claims that our

team members have disclosed, or that we have used, trade secrets or other proprietary information of our team members’

Our efforts to identify and avoid infringing on third parties’

intellectual property rights may not always be

Any claims that our products or processes infringe these rights, regardless of their merit or resolution, could be

costly, time consuming and may divert the efforts and attention of our management and technical personnel.

In addition, we may

not prevail in such proceedings given the complex technical issues and inherent uncertainties in intellectual property litigation.

claims of patent or other intellectual property infringement against us, even those without merit, could:

the cost of our products;

expensive and/or time consuming to defend;

in our being required to pay significant damages to third parties;

us to cease making or selling products that incorporate the challenged intellectual property;

us to redesign, reengineer or rebrand our products and technologies;

us to enter into royalty or licensing agreements in order to obtain the right to use a third party’s intellectual property

on terms that may not be favorable or acceptable to us;

us to develop alternative non-infringing technology, which could require significant effort and expense;

us to indemnify third parties pursuant to contracts in which we have agreed to provide indemnification for intellectual property

infringement claims;

in our customers or potential customers deferring or limiting their purchase or use of the affected products impacted by the

claims until the claims are resolved.

of the foregoing could affect our ability to compete or have a material adverse effect on our business, financial condition and

results of operations.

may violate our intellectual property rights, and we may bring litigation to protect and enforce our intellectual property rights,

which may result in substantial expense and may divert our attention from implementing our business strategy.

believe that the success of our business depends, in significant part, on obtaining patent protection for our products and technologies,

defending our patents and preserving our trade secrets.

Our failure to pursue any potential claim could result in the loss of

our proprietary rights and harm our position in the marketplace.

Therefore, we may be forced to pursue litigation to enforce our

Future litigation could result in significant costs and divert the attention of our management and key personnel from

our business operations and the implementation of our business strategy.

or our third-party manufacturers may not have the manufacturing and processing capacity to meet the production requirements of

clinical testing or consumer demand in a timely manner.

capacity to conduct clinical trials and commercialize our products will depend in part on our ability to manufacture or provide

our products on a large scale, at a competitive cost and in accordance with regulatory requirements.

We must establish and maintain

a commercial scale manufacturing process for all of our products to complete clinical trials.

We or our third-party manufacturers

may encounter difficulties with these processes at any time that could result in delays in clinical trials, regulatory submissions

or the commercialization of products.

some of our products, we or our third-party manufacturers will need to have sufficient production and processing capacity in order

to conduct human clinical trials, to produce products for commercial sale at an acceptable cost.

We have no experience in large-scale

product manufacturing, nor do we have the resources or facilities to manufacture most of our products on a commercial scale.

cannot guarantee that we or our third-party manufacturers will be able to increase capacity in a timely or cost-effective manner,

Delays in providing or increasing production or processing capacity could result in additional expense or delays in

our clinical trials, regulatory submissions and commercialization of our products.

manufacturing processes for our products have not yet been tested at commercial levels, and it may not be possible to manufacture

or process these materials in a cost-effective manner.

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business may suffer if we are unable to manage our growth.

we fail to effectively manage our growth, our ability to execute our business strategy could be impaired.

The anticipated rapid

growth of our business may place a strain on our management, operations and financial systems.

We need to improve existing systems

and controls or implement new systems and controls in response to anticipated growth.

will be dependent on third-party manufacturers since we will not initially directly manufacture our products.

we will not directly manufacture our products and will rely on third parties to do so for us.

If our manufacturing and distribution

agreements are not satisfactory, we may not be able to develop or commercialize products as planned.

In addition, we may not be

able to contract with third parties to manufacture our products in an economical manner.

Furthermore, third-party manufacturers

may not adequately perform their obligations, may delay clinical development or submission of products for regulatory approval

or otherwise may impair our competitive position.

We may not be able to enter into or maintain relationships with manufacturers

that comply with good manufacturing practices.

If a product manufacturer fails to comply with good manufacturing practices, we

could experience significant time delays or we may be unable to commercialize or continue to market the products.

Changes in our

manufacturers could require costly new product testing and facility compliance inspections.

In the United States, failure to comply

with good manufacturing practices or other applicable legal requirements can lead to federal seizure of violative products, injunctive

actions brought by the federal government, and potential criminal and civil liability on the part of a company and its officers

and employees.

Because of these and other factors, we may not be able to replace our manufacturing capacity quickly or efficiently

in the event that our manufacturers are unable to manufacture our products at one or more of their facilities.

As a result, the

sale and marketing of our products could be delayed or we could be forced to develop our own manufacturing capacity, which could

require substantial additional funds and personnel and compliance with extensive regulations.

may be dependent on the sales and marketing efforts of third parties if we choose not to develop an extensive sales and marketing

we will depend on the efforts of third parties (including sales agents and distributors) to carry out the sales and marketing

of our products.

We anticipate that each third party will control the amount and timing of resources generally devoted to these

However, these third parties may not be able to generate demand for our products.

In addition, there is a risk that

these third parties will develop products competitive to ours, which would likely decrease their incentive to vigorously promote

and sell our products.

If we are unable to enter into co-promotion agreements or to arrange for third-party distribution of our

products, we will be required to expend time and resources to develop an effective internal sales force.

However, it may not be

economical for us to market our own products or we may be unable to effectively market our products.

Therefore, our business could

be harmed if we fail to enter into arrangements with third parties for the sales and marketing of our products or otherwise fail

to establish sufficient marketing capabilities.

officers will allocate their time to other businesses thereby potentially limiting the amount of time they devote to our affairs.

This conflict of interest could have a negative impact on our operations.

officers are not required to commit their full time to our affairs, which could create a conflict of interest when allocating

their time between our operations and their other commitments.

We presently expect each of our employees to devote such amount

of time as they reasonably believe is necessary to our business.

All of our officers are engaged in several other business endeavors

and are not obligated to devote any specific number of hours to our affairs.

If our officers’

other business affairs require

them to devote more substantial amounts of time to such affairs, it could limit their ability to devote time to our affairs and

could have a negative impact on our operations.

We cannot assure you these conflicts will be resolved in our favor.

ability to be successful will be totally dependent upon the efforts of our key personnel.

ability to successfully carry out our business plan is dependent upon the efforts of our key personnel.

We cannot assure you that

any of our key personnel will remain with us for the immediate or foreseeable future.

The unexpected loss of the services of our

key personnel could have a detrimental effect on us.

We may also be unable to attract and retain additional key personnel in the

An inability to do so may impact our ability to continue and grow our operations.

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officers have fiduciary obligations to other companies and, accordingly, may have conflicts of interest in determining to which

entity a particular business opportunity should be presented.

of our officers have fiduciary obligations to other companies engaged in medical device business activities, namely Saphena Medical,

Kaleidoscope Medical and Cruzar Medsystems.

Accordingly, they may participate in transactions and have obligations that may be

in conflict or competition with our business.

As a result, a potential business opportunity may be presented by certain members

of our management team to another entity prior to its presentation to us and we may not be afforded the opportunity to engage

in such a transaction.

business, financial condition and results of operations could be adversely affected by the political and economic conditions of

the countries in which we conduct business.

business, financial condition and results of operations could be adversely affected by the political and economic conditions of

the countries in which we conduct business.

These factors include:

associated with cultural differences, languages and distance;

in clinical practices, needs, products, modalities and preferences;

payment cycles in some countries;

risks of many kinds;

and regulatory differences and restrictions;

exchange fluctuations;

exchange controls that might prevent us from repatriating cash earned in certain countries;

and economic instability and export restrictions;

in sterilization requirements for multi-usage surgical devices;

adverse tax consequences;

cost associated with doing business internationally;

in implementing educational programs required by our approach to doing business;

economic developments in economies around the world and the instability of governments, including the threat of war, terrorist

attacks, epidemic or civil unrest;

changes in laws and governmental policies, especially those affecting trade and investment;

such as the Ebola virus, the enterovirus and the avian flu, which may adversely affect our workforce as well as our local

suppliers and customers;

or export licensing requirements imposed by governments;

labor standards;

levels of protection of intellectual property;

threat that our operations or property could be subject to nationalization and expropriation;

practices of the regulatory, tax, judicial and administrative bodies in the jurisdictions where we operate;

burdensome taxation and changes in foreign tax.

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products we may develop may not be approved for sale in the U.S.

or in any other country.

only product for which we have obtained approval or clearance from the FDA or a comparable foreign regulatory authority is our

EsoCheck product.

In certain limited circumstances, we also may market our products without such approval or clearance, as is

the case for the EsoGuard LDT.

Generally, however, neither we nor any future collaboration partner can commercialize any products

we may develop in the U.S.

or in any foreign country without first obtaining regulatory approval for the product from the FDA

or comparable foreign regulatory authorities.

The approval route in the U.S.

for any products we may develop may be either via

the PMA process, a de novo 510(k) pathway, or traditional 510(k).

The PMA approval process is more complex, costly and

time consuming than the 510(k) process.

Additional randomized, controlled clinical trials may be necessary to obtain approval.

The approval process may take several years to complete and may never be obtained.

Before obtaining regulatory approvals for the

commercial sale of any product we may develop in the U.S., we must demonstrate with substantial evidence, gathered in preclinical

and well-controlled clinical studies, that the planned products are safe and effective for use for that target indication.

may not conduct such a trial or may not successfully enroll or complete any such trial.

Any products we may develop may not achieve

the required primary endpoint in the clinical trial and may not receive regulatory approval.

We must also demonstrate that the

manufacturing facilities, processes and controls for any products we may develop are adequate.

Moreover, obtaining regulatory

approval in one country for marketing of any products we may develop does not ensure we will be able to obtain regulatory approval

in other countries, while a failure or delay in obtaining regulatory approval in one country may have a negative effect on the

regulatory process in other countries.

if we or any future collaboration partner were to successfully obtain a regulatory approval for any product we may develop, any

approval might contain significant limitations related to use restrictions for specified age groups, warnings, precautions or

contraindications, or may be subject to burdensome post-approval study or risk management requirements.

If we are unable to obtain

regulatory approval for any products, we may develop in one or more jurisdictions, or any approval contains significant limitations,

we may not be able to obtain sufficient revenue to justify commercial launch.

Also, any regulatory approval of a product, once

obtained, may be withdrawn.

If we are unable to successfully obtain regulatory approval to sell any products we may develop in

or other countries, our business, financial condition, results of operations and growth prospects could be adversely

business may be adversely affected by health epidemics, including the recent coronavirus outbreak.

December 2019, an outbreak of a novel strain of coronavirus (“COVID-19”) originated in Wuhan, China and has since

spread to a number of other countries, including the U.S.

On March 11, 2020, the World Health Organization characterized COVID-19

as a pandemic.

may have an adverse impact on our operations, supply chains and distribution systems or those of our contractors of our laboratory

partner, and increase our expenses, including as a result of impacts associated with preventive and precautionary measures

that are being taken, such restrictions on travel, quarantine polices and social distancing.

For example, the ability of

our employees or those of our contractors or laboratory partner to work may be adversely affected.

In addition, the spread

of COVID-19 has disrupted the United States’

healthcare and healthcare regulatory systems which could divert healthcare

resources away from, or materially delay FDA approval with respect to our products.

Furthermore, our clinical trials may be affected

by the COVID-19 outbreak.

Site initiation and patient enrollment may be delayed, for example, due to prioritization of hospital

resources toward the COVID-19 outbreak, travel restrictions imposed by governments, and the inability to access sites for initiation

and monitoring.

COVID-19 also may have an adverse impact on the economies and financial markets of many countries, resulting in

an economic downturn that could affect demand for our product candidates, if approved, and impact our operating results.

the foregoing could harm our business and we cannot anticipate all of the ways in which health epidemics such as COVID-19 could

adversely impact our business.

Although we are continuing to monitor and assess the effects of the COVID-19 pandemic on our business,

the ultimate impact of the COVID-19 outbreak or a similar health epidemic is highly uncertain and subject to change.

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in our information technology or storage systems could significantly disrupt our operations and our research and development efforts,

which could adversely impact our revenues, as well as our research, development and commercialization efforts.

ability to execute our business strategy depends, in part, on the continued and uninterrupted performance of our information technology

(“IT”) systems that support our operations and our research and development efforts, and those IT systems within the

control of our contract manufacturers and contract laboratories.

The integrity and protection of our own data, and that of our

customers and employees, is critical to our business.

The regulatory environment governing information, security and privacy laws

is increasingly demanding and continues to evolve.

IT systems are vulnerable to damage from a variety of sources, including telecommunications

or network failures, malicious human acts and natural disasters.

Moreover, despite network security and back-up measures, some

of our servers are potentially vulnerable to physical or electronic break-ins, computer viruses and similar disruptive problems.

Despite the precautionary measures we have taken to prevent unanticipated problems that could affect our IT systems, and the precautionary

measures taken by our contract parties, sustained or repeated system failures that interrupt our ability to generate and maintain

data, could adversely affect our ability to operate our business.

Furthermore, any breach in our IT systems could lead to the

unauthorized access, disclosure and use of non-public information, including protected health information, which is protected

by HIPAA and other laws.

Any such access, disclosure, or other loss of information could result in legal claims or proceedings,

liability under laws that protect the privacy of personal information, and damage to our reputation.

upgrades, enhancements and replacements, as well as new systems, are required from time to time, and require significant expenditures

and allocation of valuable employee resources.

Delays in integration or disruptions to our business from implementation of these

new or upgraded systems could have a material adverse impact on our financial condition and operating results.

There can be no

assurance that our process of improving existing systems, developing new systems to support our expanding operations, integrating

new systems, protecting confidential patient information, and improving service levels will not be delayed or that additional

systems issues will not arise in the future.

Failure to adequately protect and maintain the integrity of our information systems

issues and data may result in a material adverse effect on our financial position, results of operations and cash flows.

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Related to Government Regulation

regulatory approval process is expensive, time consuming and uncertain, and may prevent us or our partners from obtaining approval

for the commercialization of any products we may develop.

Approval of products in the U.S.

or other territories may require that

we, or a partner, conduct randomized, controlled clinical trials.

many of the products we are currently developing, the regulatory

pathway in the U.S.

for approval of the product has not been determined.

However, it is possible the FDA will require us to file

for approval via the PMA pathway for one or more of our planned products.

In this case, the FDA is likely to require that randomized,

controlled clinical trials be conducted before an application for approval can be filed.

These are typically expensive and time

consuming and require substantial commitment of financial and personnel resources from the sponsoring company.

These clinical

trials also entail significant risk, and the resulting data may not be sufficient to support approval by the FDA or other regulatory

regulatory approval of a PMA or a 510(k) pathway is not guaranteed, and the filing and approval process itself is expensive and

may take several years.

The FDA also has substantial discretion in the approval process.

Despite the time and expense exerted,

failure may occur at any stage, and we could encounter problems that cause us to abandon or repeat clinical studies.

delay, limit, or deny approval of a future product for many reasons, including but not limited to:

future product may not be deemed to be safe and effective;

officials may not find the data from clinical and preclinical studies sufficient;

FDA may not approve our or our third-party manufacturer’s processes or facilities;

FDA may change its approval policies or adopt new regulations.

any products we may develop fail to demonstrate safety and efficacy in further clinical studies may be required, or do not gain

regulatory approval, our business and results of operations will be materially and adversely harmed.

if we receive regulatory approval for any product we may develop, we will be subject to ongoing regulatory obligations and continued

regulatory review, which may result in significant additional expense and subject us to penalties if we fail to comply with applicable

regulatory requirements.

regulatory approval has been obtained, the approved product and its manufacturer are subject to continual review by the FDA or

regulatory authorities.

Our regulatory approval for any products we may develop may be subject to limitations on the

indicated uses for which the product may be marketed.

Future approvals may contain requirements for potentially costly post-marketing

follow-up studies to monitor the safety and efficacy of the approved product.

In addition, we are subject to extensive and ongoing

regulatory requirements by the FDA and other regulatory authorities with regard to the labeling, packaging, adverse event reporting,

storage, advertising, promotion and recordkeeping for our products.

In addition, we are required to comply with cGMP regulations

regarding the manufacture of any products we may develop, which include requirements related to quality control and quality assurance

as well as the corresponding maintenance of records and documentation.

Further, regulatory authorities must approve these manufacturing

facilities before they can be used to manufacture drug products, and these facilities are subject to continual review and periodic

inspections by the FDA and other regulatory authorities for compliance with cGMP regulations.

If we or a third party discover

previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the

facility where the product is manufactured, a regulatory authority may impose restrictions on that product, the manufacturer or

us, including requiring withdrawal of the product from the market or suspension of manufacturing.

to obtain regulatory approvals in foreign jurisdictions will prevent us from marketing our products internationally.

intend to seek distribution and marketing partners for one or more of the products we may develop in foreign countries.

procedures vary among countries and can involve additional clinical testing, and the time required to obtain approval may differ

from that required to obtain FDA approval.

Moreover, clinical studies or manufacturing processes conducted in one country may

not be accepted by regulatory authorities in other countries.

Approval by the FDA does not ensure approval by regulatory authorities

in other countries, and approval by one or more foreign regulatory authorities does not ensure approval by regulatory authorities

in other foreign countries or by the FDA.

However, a failure or delay in obtaining regulatory approval in one country may have

a negative effect on the regulatory process in others.

The foreign regulatory approval process may include all of the risks associated

with obtaining FDA approval.

We may not obtain foreign regulatory approvals on a timely basis, if at all.

We may not be able to

file for regulatory approvals and even if we file, we may not receive necessary approvals to commercialize our products in any

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reform measures could hinder or prevent our products’

commercial success.

the U.S., there have been, and we expect there will continue to be, a number of legislative and regulatory changes to the healthcare

system in ways that could affect our future revenue and profitability and the future revenue and profitability of our potential

Federal and state lawmakers regularly propose and, at times, enact legislation that could result in significant changes

to the healthcare system, some of which are intended to contain or reduce the costs of medical products and services.

one of the most significant healthcare reform measures in decades, the PPACA, was enacted in 2010.

The PPACA contains a number

of provisions, including those governing enrollment in federal healthcare programs, reimbursement changes and fraud and abuse

measures, all of which will impact existing government healthcare programs and will result in the development of new programs.

The PPACA, among other things, could result in the imposition of injunctions.

Supreme Court upheld the constitutionality of most elements of the PPACA in June 2012, other legal challenges are still

pending final adjudication in several jurisdictions.

In addition, Congress has also proposed a number of legislative initiatives,

including possible repeal of the PPACA.

For instance, in December 2019, the 2.3% tax on sales of medical devices was repealed.

At this time, it remains unclear whether there will be any changes made to the PPACA, whether to certain provisions or its entirety.

We cannot assure you that the PPACA, as currently enacted or as amended in the future, will not adversely affect our business

and financial results and we cannot predict how future federal or state legislative or administrative changes relating to healthcare

reform will affect our business.

addition, other legislative changes have been proposed and adopted since the PPACA was enacted.

For example, the Budget Control

Act of 2011, among other things, created the Joint Select Committee on Deficit Reduction to recommend proposals for spending reductions

The Joint Select Committee did not achieve a targeted deficit reduction of at least $1.2 trillion for the years 2013

through 2021, which triggered the legislation’s automatic reduction to several government programs, including aggregate

reductions to Medicare payments to providers of up to 2.0% per fiscal year, starting in 2013.

In January 2013, President Obama

signed into law the American Taxpayer Relief Act of 2012, or the ATRA, which delayed for another two months the budget cuts mandated

by the sequestration provisions of the Budget Control Act of 2011.

The ATRA, among other things, also reduced Medicare payments

to several providers, including hospitals, and increased the statute of limitations period for the government to recover overpayments

to providers from three to five years.

In March 2013, President Obama signed an executive order implementing sequestration, and

in April 2013, the 2.0% Medicare reductions went into effect.

We cannot predict whether any additional legislative changes will

affect our business.

likely will continue to be legislative and regulatory proposals at the federal and state levels directed at containing or lowering

the cost of health care.

We cannot predict the initiatives that may be adopted in the future or their full impact.

The continuing

efforts of the government, insurance companies, managed care organizations and other payors of healthcare services to contain

or reduce costs of health care may adversely affect:

ability to set a price that we believe is fair for our products;

ability to generate revenue and achieve or maintain profitability;

availability of capital.

changes in regulatory requirements and guidance may occur, both in the United States and in foreign countries, and we may need

to amend clinical study protocols to reflect these changes.

Amendments may require us to resubmit our clinical study protocols

to IRB’s for reexamination, which may impact the costs, timing or successful completion of a clinical study.

widely publicized events concerning the safety risk of certain drug and medical device products, regulatory authorities, members

of Congress, the Governmental Accounting Office, medical professionals and the general public have raised concerns about potential

safety issues.

These events have resulted in the recall and withdrawal of medical device products, revisions to product labeling

that further limit use of products and establishment of risk management programs that may, for instance, restrict distribution

of certain products or require safety surveillance or patient education.

The increased attention to safety issues may result in

a more cautious approach by the FDA or other regulatory authorities to clinical studies and the drug approval process.

clinical studies may receive greater scrutiny with respect to safety, which may make the FDA or other regulatory authorities more

likely to terminate or suspend clinical studies before completion or require longer or additional clinical studies that may result

in substantial additional expense and a delay or failure in obtaining approval or approval for a more limited indication than

originally sought.

the serious public health risks of high profile adverse safety events with certain products, the FDA or other regulatory authorities

may require, as a condition of approval, costly risk evaluation and mitigation strategies, which may include safety surveillance,

restricted distribution and use, patient education, enhanced labeling, special packaging or labeling, expedited reporting of certain

adverse events, preapproval of promotional materials and restrictions on direct-to-consumer advertising.

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we fail to comply with healthcare regulations, we could face substantial penalties and our business, operations and financial

condition could be adversely affected.

though we do not and will not control referrals of healthcare services or bill directly to Medicare, Medicaid or other third-party

payors, certain federal and state healthcare laws and regulations pertaining to fraud and abuse and patients’

and will be applicable to our business.

We could be subject to healthcare fraud and abuse and patient privacy regulation by both

the federal government and the states in which we conduct our business.

The regulations that may affect our ability to operate

include, without limitation:

federal healthcare program Anti-Kickback Statute, which prohibits, among other things, any person from knowingly and willfully

offering, soliciting, receiving or providing remuneration, directly or indirectly, in exchange for or to induce either the

referral of an individual for, or the purchase, order or recommendation of, any good or service for which payment may be made

under federal healthcare programs, such as the Medicare and Medicaid programs;

Foreign Corrupt Practices Act, or FCPA, which prohibits payments or the provision of anything of value to foreign officials

for the purpose of obtaining or keeping business;

federal False Claims Act, or FCA, which prohibits, among other things, individuals or entities from knowingly presenting,

or causing to be presented, false claims, or knowingly using false statements, to obtain payment from the federal government,

and which may apply to entities like us which provide coding and billing advice to customers;

criminal laws that prohibit executing a scheme to defraud any healthcare benefit program or making false statements relating

to healthcare matters;

federal transparency requirements under the Health Care Reform Law requires manufacturers of drugs, devices, biologics and

medical supplies to report to the Department of Health and Human Services information related to physician payments and other

transfers of value and physician ownership and investment interests;

federal Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic

and Clinical Health Act, which governs the conduct of certain electronic healthcare transactions and protects the security

and privacy of protected health information;

law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or

services reimbursed by any third-party payor, including commercial insurers.

PPACA, among other things, amends the intent requirement of the Federal Anti-Kickback Statute and criminal healthcare fraud statutes.

A person or entity no longer needs to have actual knowledge of this statute or specific intent to violate it.

In addition, the

PPACA provides that the government may assert that a claim including items or services resulting from a violation of the Federal

Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the FCA.

our operations are found to be in violation of any of the laws described above or any other governmental regulations that apply

to us, we may be subject to penalties, including civil and criminal penalties, damages, fines and the curtailment or restructuring

of our operations.

Any penalties, damages, fines, curtailment or restructuring of our operations could adversely affect our ability

to operate our business and our financial results.

Any action against us for violation of these laws, even if we successfully

defend against it, could cause us to incur significant legal expenses and divert our management’s attention from the operation

of our business.

Moreover, achieving and sustaining compliance with applicable federal and state privacy, security and fraud laws

may prove costly.

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required, clinical trials necessary to support a 510(k) notice or PMA application will be expensive and will require the enrollment

of large numbers of patients, and suitable patients may be difficult to identify and recruit.

Delays or failures in our clinical

trials will prevent us from commercializing any modified or new products and will adversely affect our business, operating results

and prospects.

and completing clinical trials necessary to support a 510(k) notice or a PMA application will be time-consuming and expensive

and the outcome uncertain.

Moreover, the results of early clinical trials are not necessarily predictive of future results, and

any product the Company advances into clinical trials may not have favorable results in early or later clinical trials.

successful clinical studies will require the enrollment of large numbers of patients, and suitable patients may be difficult to

identify and recruit.

Patient enrollment in clinical trials and completion of patient participation and follow-up depend on many

factors, including the size of the patient population, the nature of the trial protocol, the attractiveness of, or the discomforts

and risks associated with, the treatments received by patients enrolled as subjects, the availability of appropriate clinical

trial investigators, support staff, and proximity of patients to clinical sites and ability to comply with the eligibility and

exclusion criteria for participation in the clinical trial and patient compliance.

For example, patients may be discouraged from

enrolling in our clinical trials if the trial protocol requires them to undergo extensive post-treatment procedures or follow-up

to assess the safety and effectiveness of our products or if they determine that the treatments received under the trial protocols

are not attractive or involve unacceptable risks or discomforts.

Patients may also not participate in our clinical trials if they

choose to participate in contemporaneous clinical trials of competitive products.

In addition, patients participating in clinical

trials may die before completion of the trial or suffer adverse medical events unrelated to investigational products.

of sufficient and appropriate clinical protocols to demonstrate safety and efficacy may be required and the Company may not adequately

develop such protocols to support clearance and approval.

Further, the FDA may require the Company to submit data on a greater

number of patients than it originally anticipated and/or for a longer follow-up period or change the data collection requirements

or data analysis for any clinical trials.

Delays in patient enrollment or failure of patients to continue to participate in a

clinical trial may cause an increase in costs and delays in the approval and attempted commercialization of our products or result

in the failure of the clinical trial.

The FDA may not consider our data adequate to demonstrate safety and efficacy.

Such increased

costs and delays or failures could adversely affect our business, operating results and prospects.

results of the Company’s clinical trials may not support our product candidate claims or may result in the discovery of

adverse side effects.

if any of the Company’s clinical trials are completed as planned, it cannot be certain that study results will support product

candidate claims or that the FDA or foreign regulatory authorities will agree with our conclusions regarding them.

pre-clinical evaluation and early clinical trials does not ensure that later clinical trials will be successful, and we cannot

be sure that the later trials will replicate the results of prior trials and pre-clinical studies.

The clinical trial process

may fail to demonstrate that our product candidates are safe and effective for the proposed indicated uses, which could cause

us to abandon a product candidate and may delay development of others.

Any delay or termination of our clinical trials will delay

the filing of our product submissions and, ultimately, our ability to commercialize our product candidates and generate revenues.

It is also possible that patients enrolled in clinical trials will experience adverse side effects that are not currently part

of the product candidate’s profile.

Company’s medical products may in the future be subject to product recalls that could harm its reputation, business and

financial results.

FDA has the authority to require the recall of commercialized medical device products in the event of material deficiencies or

defects in design or manufacture.

In the case of the FDA, the authority to require a recall must be based on an FDA finding that

there is a reasonable probability that the device would cause serious injury or death.

Manufacturers may, under their own initiative,

recall a product if any material deficiency in a device is found.

A government-mandated or voluntary recall by the Company or

one of its distributors could occur as a result of component failures, manufacturing errors, design or labeling defects or other

deficiencies and issues.

Recalls of any of the Company’s products would divert managerial and financial resources and have

an adverse effect on its financial condition and results of operations.

The FDA requires that certain classifications of recalls

be reported to the FDA within ten (10) working days after the recall is initiated.

Companies are required to maintain certain

records of recalls, even if they are not reportable to the FDA.

The Company may initiate voluntary recalls involving its products

in the future that the Company determines do not require notification of the FDA.

If the FDA disagrees with the Company’s

determinations, they could require the Company to report those actions as recalls.

A future recall announcement could harm the

Company’s reputation with customers and negatively affect its sales.

In addition, the FDA could take enforcement action

for failing to report the recalls when they were conducted.

No recalls of the Company’s medical products have been reported

1A Risk Factors - continued

Associated with Our Business - continued

the Company’s medical products cause or contribute to a death or a serious injury, or malfunction in certain ways, we will

be subject to medical device reporting regulations, which can result in voluntary corrective actions or agency enforcement actions.

the FDA medical device reporting regulations, medical device manufacturers are required to report to the FDA information that

a device has or may have caused or contributed to a death or serious injury or has malfunctioned in a way that would likely cause

or contribute to death or serious injury if the malfunction of the device or one of our similar devices were to recur.

Company fails to report these events to the FDA within the required timeframes, or at all, the FDA could take enforcement action

against the Company.

Any such adverse event involving its products also could result in future voluntary corrective actions, such

as recalls or customer notifications, or agency action, such as inspection or enforcement action.

Any corrective action, whether

voluntary or involuntary, as well as defending ourselves in a lawsuit, will require the dedication of the Company’s time

and capital, distract management from operating our business, and may harm its reputation and financial results.

the effectiveness and safety of the Company’s devices are not supported by long-term data, the Company’s future revenues

could decline.

Company’s products may not be accepted in the market if the Company does not produce clinical data supported by the independent

efforts of clinicians, and if that data indicates that treatment with the Company’s products does not provide patients with

sustained benefits or that treatment with the Company’s products is less effective or less safe than the Company’s

current data suggests, the Company’s future revenues could decline.

In addition, the FDA could then bring legal or regulatory

enforcement actions against the Company and/or its products including, but not limited to, recalls or requirements for pre-market

510(k) authorizations.

The Company can give no assurance that its data will be substantiated in studies involving more patients.

In such a case, the Company may never achieve significant revenues or profitability.

the Company is found to be promoting the use of its devices for unapproved or “off-label”

uses or engaging in other

noncompliant activities, the Company may be subject to recalls, seizures, fines, penalties, injunctions, adverse publicity, prosecution,

or other adverse actions, resulting in damage to its reputation and business.

Company’s labeling, advertising, promotional materials and user training materials must comply with the FDA and other applicable

laws and regulations, including the prohibition of the promotion of a medical device for a use that has not been cleared or approved

Obtaining 510(k) clearance or PMA approval only permits the Company to promote its products for the uses specifically

cleared by the FDA.

Use of a device outside its cleared or approved indications is known as “off-label”

and consumers may use the Company’s products off-label because the FDA does not restrict or regulate a physician’s

choice of treatment within the practice of medicine nor is there oversight on patient use of over-the-counter devices.

the Company may request additional cleared indications for our current products, the FDA may deny those requests, require additional

expensive clinical data to support any additional indications or impose limitations on the intended use of any cleared product

as a condition of clearance.

Even if regulatory clearance or approval of a product is granted, such clearance or approval may

be subject to limitations on the intended uses for which the product may be marketed and reduce our potential to successfully

commercialize the product and generate revenue from the product.

the FDA determines that the Company’s labeling, advertising, promotional materials, or user training materials, or representations

made by Company personnel, include the promotion of an off-label use for the device, or that the Company has made false or misleading

or inadequately substantiated promotional claims, or claims that could potentially change the regulatory status of the product,

the agency could take the position that these materials have misbranded the Company’s devices and request that the Company

modifies its labeling, advertising, or user training or promotional materials and/or subject the Company to regulatory or legal

enforcement actions, including the issuance of an Untitled Letter or a Warning Letter, injunction, seizure, recall, adverse publicity,

civil penalties, criminal penalties, or other adverse actions.

It is also possible that other federal, state, or foreign enforcement

authorities might take action if they consider the Company’s labeling, advertising, promotional, or user training materials

to constitute promotion of an unapproved use, which could result in significant fines, penalties, or other adverse actions under

other statutory authorities, such as laws prohibiting false claims for reimbursement.

In that event, we would be subject to extensive

fines and penalties and the Company’s reputation could be damaged and adoption of the products would be impaired.

the Company intends to refrain from statements that could be considered off-label promotion of its products, the FDA or another

regulatory agency could disagree and conclude that the Company has engaged in off-label promotion.

For example, the Company has

made statements regarding some of its devices that the FDA may view as off-label promotion.

In addition, any such off-label use

of the Company’s products may increase the risk of injury to patients, and, in turn, the risk of product liability claims,

and such claims are expensive to defend and could divert the Company’s management’s attention and result in substantial

damage awards against the Company.

1A Risk Factors - continued

Associated with Our Business - continued

Company may be subject, directly or indirectly, to federal and state healthcare fraud and abuse laws and regulations and could

face substantial penalties if the Company is unable to fully comply with such laws.

the Company does not control referrals of healthcare services or bill directly to Medicare, Medicaid or other third-party payors,

many healthcare laws and regulations apply to the Company’s business.

For example, the Company could be subject to healthcare

fraud and abuse and patient privacy regulation and enforcement by both the federal government and the states in which the Company

intends to conduct its business.

The healthcare laws and regulations that may affect the Company’s ability to operate include:

federal healthcare programs’

Anti-Kickback Law, which prohibits, among other things, persons or entities from soliciting,

receiving, offering or providing remuneration, directly or indirectly, in return for or to induce either the referral of an

individual for, or the purchase order or recommendation of, any item or service for which payment may be made under a federal

healthcare program such as the Medicare and Medicaid programs;

false claims laws which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be

presented, claims for payment from Medicare, Medicaid, or other third-party payors that are false or fraudulent, or are for

items or services not provided as claimed and which may apply to entities like the Company to the extent that the Company’s

interactions with customers may affect their billing or coding practices;

federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which established new federal crimes for knowingly

and willfully executing a scheme to defraud any healthcare benefit program or making false statements in connection with the

delivery of or payment for healthcare benefits, items or services, as well as leading to regulations imposing certain requirements

relating to the privacy, security and transmission of individually identifiable health information;

law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or

services reimbursed by any third-party payor, including commercial insurers, and state laws governing the privacy of health

information in certain circumstances, many of which differ from each other in significant ways and often are not preempted

by HIPAA, thus complicating compliance efforts.

the medical device industry has been under heightened scrutiny as the subject of government investigations and regulatory or legal

enforcement actions involving manufacturers who allegedly offered unlawful inducements to potential or existing customers in an

attempt to procure their business, including arrangements with physician consultants.

If the Company’s operations or arrangements

are found to be in violation of any of the laws described above or any other governmental regulations that apply to the Company,

the Company may be subject to penalties, including civil and criminal penalties, damages, fines, exclusion from the Medicare and

Medicaid programs and the curtailment or restructuring of its operations.

Any penalties, damages, fines, exclusions, curtailment

or restructuring of the Company’s operations could adversely affect its ability to operate its business and its financial

The risk of the Company being found in violation of these laws is increased by the fact that many of these laws are broad

and their provisions are open to a variety of interpretations.

Any action against the Company for violation of these laws, even

if the Company successfully defends against that action and the underlying alleged violations, could cause the Company to incur

significant legal expenses and divert its management’s attention from the operation of its business.

If the physicians or

other providers or entities with whom the Company does business are found to be non-compliant with applicable laws, they may be

subject to sanctions, which could also have a negative impact on the Company’s business.

1A Risk Factors - continued

Associated with Our Business - continued

Company or its subsidiaries’

failure to obtain or maintain necessary FDA clearances or approvals, or equivalents thereof

and relevant foreign markets, could hurt our ability to distribute and market our products.

both the United States and foreign markets, the Company and its subsidiaries are affected by extensive laws, governmental regulations,

administrative determinations, court decisions and similar constraints.

Such laws, regulations and other constraints may exist

at the federal, state or local levels in the United States and at analogous levels of government in foreign jurisdictions.

example, as discussed above, certain of the Company’s planned product candidates may fall under the regulatory purview

of various centers at the FDA and in other countries by similar health and regulatory authorities.

Each medical device that

the Company wishes to market in the U.S.

must first receive either 510(k) clearance or premarket approval from the FDA unless

an exemption applies.

Either process can be lengthy and expensive.

The FDA’s 510(k) clearance process may take from three

to twelve months, or longer, and may or may not require human clinical data.

The premarket approval process is much costlier and

It may take from eleven months to three years, or even longer, and will likely require significant supporting human

clinical data.

Delays in obtaining regulatory clearance or approval could adversely affect the Company’s revenues and profitability.

Although the Company has obtained 510(k) clearance for EsoCheck, this clearance may be subject to revocation if post-marketing

data demonstrates safety issues or lack of effectiveness.

Similar clearance processes may apply in foreign countries.

more stringent regulatory requirements or safety and quality standards may be issued in the future with an adverse effect on the

Company’s business.

addition, the formulation, manufacturing, packaging, labeling, distribution, importation, sale and storage of the Company’s

and its subsidiaries’

products are subject to extensive regulation by various federal agencies, including, but not limited

to, the FDA, the FTC, State Attorneys General in the United States, the Ministry of Health, Labor and Welfare in Japan, as well

as by various other federal, state, local and international regulatory authorities in the countries in which its products are

manufactured, distributed or sold.

If the Company or its manufacturers fail to comply with those regulations, the Company and

its subsidiaries could become subject to significant penalties or claims, which could harm its results of operations or its ability

to conduct its business.

In addition, the adoption of new regulations or changes in the interpretations of existing regulations

may result in significant compliance costs or discontinuation of product sales and may impair the marketing of its products, resulting

in significant loss of net sales.

The Company’s failure to comply with federal or state regulations, or with regulations

in foreign markets that cover its product claims and advertising, including direct claims and advertising by the Company or its

subsidiaries, may result in enforcement actions and imposition of penalties or otherwise harm the distribution and sale of its

Further, the Company and its subsidiaries’

businesses are subject to laws governing our accounting, tax and import

and export activities.

Failure to comply with these requirements could result in legal and/or financial consequences that might

adversely affect its sales and profitability.

1A Risk Factors - continued

Associated with Ownership of Our Common Stock

may issue shares of our common and /or preferred stock in the future which could reduce the equity interest of our stockholders

and might cause a change in control of our ownership.

certificate of incorporation authorizes the issuance of up to 100,000,000 shares of common stock, par value $.001 per share, and

20,000,000 shares of preferred stock, par value $.001 per share.

In addition, pursuant to the November 2019 SPA, we are

required to seek stockholder approval to increase the number of shares of our common stock we are authorized to issue to 150,000,000

We may issue a substantial number of additional shares of our common stock or preferred stock, or a combination of common

and preferred stock, to raise additional funds or in connection with any strategic acquisition.

The issuance of additional shares

of our common stock or any number of shares of our preferred stock:

significantly reduce the equity interest of investors;

subordinate the rights of holders of common stock if preferred stock is issued with rights senior to those afforded to our

common stockholders;

cause a change in control if a substantial number of our shares of common stock are issued, which may affect, among other

things, our ability to use our net operating loss carryforwards, if any, and most likely also result in the resignation or

removal of some or all of our present officers and directors;

adversely affect prevailing market prices for our common stock.

1A Risk Factors - continued

Associated with Ownership of Our Common Stock - continued

have incurred substantial indebtedness, and may incur additional indebtedness in the future, which could adversely affect our

liquidity, financial condition, and results of operations.

of December 31, 2019, we had an aggregate of $8.7 million of indebtedness, which was secured by substantially all of our assets.

In addition, we may incur additional debt in the future.

Our indebtedness could have important consequences on our business.

the extent new debt and/or new credit sources are added to our existing debt, the related risks for us could intensify.

In particular,

us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the

availability of our cash flow to fund operating expenditures, capital expenditures, and for other general corporate purposes;

among other things, our ability to borrow additional funds and otherwise raise additional capital, and our ability to conduct

acquisitions, joint, ventures or similar arrangements, as a result of our obligations to repay such indebtedness and as a

result of restrictive covenants contained in the agreements governing our indebtedness;

our flexibility in planning for, or reacting to, changes in our businesses and the industries in which we operate;

our vulnerability to general adverse economic and industry conditions;

us at a competitive disadvantage compared to our competitors that have less debt.

addition, the agreements governing our indebtedness contain (and any agreements governing our future indebtedness may contain)

financial and other restrictive covenants which may potentially be subject to factors beyond our control and negatively affect

our ability to comply.

our right to pay the interest and principal balance of our existing indebtedness by issuing shares of our common stock, we may

be required to repay such indebtedness in cash, if we do not meet certain customary equity conditions (including minimum price

and volume thresholds) or in certain other circumstances.

For example, we may be required to repay the outstanding principal balance

and accrued but unpaid interest, along with a premium, upon the occurrence of certain changes of control or an event of default.

We also may be required to repay any future indebtedness incurred by us in cash.

In such event, we may not be able to generate

sufficient cash to service our existing indebtedness, or any future indebtedness incurred by us, as cash payments become due.

we are unable to make payments as they come due or comply with the restrictions and covenants in our existing indebtedness, or

any other agreements governing our future indebtedness, there could be a default under the terms of such agreements.

In such event,

or if we are otherwise in default under such agreements, including pursuant to any cross-default provisions of such agreements,

the lenders could terminate any commitments to lend and/or accelerate the loans and declare all amounts borrowed due and

Furthermore, our existing secured lenders and any future lenders to whom we grant a security interest, could foreclose

on their security interests in our assets, including our intellectual property.

If any of those events occur, our assets might

not be sufficient to repay in full all of our outstanding indebtedness and we may be unable to find alternative financing.

if we could obtain alternative financing, it may not be on terms we deem favorable or acceptable to us.

Additionally, we may not

be able to amend the agreements governing our indebtedness, or obtain needed waivers, on satisfactory terms or without incurring

substantial costs.

Failure to maintain existing or secure new financing could have a material adverse effect on our liquidity,

financial position, and/or results of operations.

management and their affiliates control a substantial interest in us and thus may influence certain actions requiring a stockholder

of December 31, 2019, our management and their affiliates collectively own approximately 14% of our issued and outstanding shares

of common stock.

Accordingly, these individuals would have considerable influence regarding the outcome of any transaction that

requires stockholder approval.

Furthermore, our Board of Directors is and will be divided into three classes, each of which will

generally serve for a term of three years with only one class of directors being elected in each year.

As a consequence of our

“staggered”

Board of Directors, only a minority of the Board of Directors will be considered for election in any given

year and our initial stockholders, because of their ownership position, will have considerable influence regarding the outcome.

1A Risk Factors - continued

Associated with Ownership of Our Common Stock - continued

can be no assurance that our common stock will continue to trade on the Nasdaq Capital Market or another national securities exchange.

October 10, 2019, we were not in compliance with the market value of listed securities (“MVLS”) standard of

the continued listing standards for Nasdaq Capital Market companies.

Although on January 10, 2020, the Nasdaq Staff notified

us that we had regained compliance, there can be no assurance that we will be able to continue to meet the MVLS

or any of the other Nasdaq Capital Market listing standards.

If we are unable to maintain compliance with the MVLS standard and

all other listing standard, our common stock may no longer be listed on the Nasdaq Capital Market or another national securities

exchange and the liquidity and market price of our common stock may be adversely affected.

robust public market for our common stock may not be sustained, which could affect your ability to sell our common stock or depress

the market price of our common stock.

are unable to predict whether an active trading market for our common stock will be sustained.

If an active market is not sustained

for any reason, it may be difficult for you to sell your securities at the time you wish to sell them, at a price that is attractive

to you, or at all.

stock price may be volatile, and purchasers of our securities could incur substantial losses.

stock price is likely to be volatile.

The stock market in general, and the market for life science companies, and medical device

companies in particular, have experienced extreme volatility that has often been unrelated to the operating performance of particular

The market price for our common stock may be influenced by many factors, including the following:

ability to successfully commercialize, and realize revenues from sales of, any products we may develop;

performance, safety and side effects of any products we may develop;

success of competitive products or technologies;

of clinical studies of any products we may develop or those of our competitors;

or legal developments in the U.S.

and other countries, especially changes in laws or regulations applicable to any products

we may develop;

introductions

and announcements of new products by us, our commercialization partners, or our competitors, and the timing of these introductions

or announcements;

taken by regulatory agencies with respect to our products, clinical studies, manufacturing process or sales and marketing

in our financial results or those of companies that are perceived to be similar to us;

success of our efforts to acquire or in-license additional products or other products we may develop;

concerning our collaborations, including but not limited to those with our sources of manufacturing supply and our commercialization

concerning our ability to bring our manufacturing processes to scale in a cost-effective manner;

announcements

by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments;

or disputes concerning patents or other proprietary rights, including patents, litigation matters and our ability to obtain

patent protection for our products;

ability or inability to raise additional capital and the terms on which we raise it;

recruitment or departure of key personnel;

in the structure of healthcare payment systems;

conditions in the medical device, pharmaceutical and biotechnology sectors;

or anticipated changes in earnings estimates or changes in stock market analyst recommendations regarding our common stock,

other comparable companies or our industry generally;

volume of our common stock;

of our common stock by us or our stockholders;

economic, industry and market conditions;

other risks described in this “

Risk Factors ”

broad market and industry factors may seriously harm the market price of our common stock, regardless of our operating performance.

In the past, following periods of volatility in the market, securities class action litigation has often been instituted against

Such litigation, if instituted against us, could result in substantial costs and diversion of management’s attention

and resources, which could materially and adversely affect our business, financial condition, results of operations and growth

1A Risk Factors - continued

Associated with Ownership of Our Common Stock - continued

outstanding warrants and other convertible securities may have an adverse effect on the market price of our common stock.

of December 31, 2019, we had outstanding:

(i) employee stock options to purchase 5,203,529 shares of our common stock at a weighted

average exercise price of $2.68 per share;

(ii) warrants to purchase 17,196,857 shares of our common stock at a weighted average

exercise price of $1.68 per share;

(iii) unit purchase options to purchase 53,000 units at an exercise price of $5.50 per unit,

with each unit consisting of one share of our common stock and one warrant, and each warrant entitling the holder to purchase

one share of our common stock at an exercise price of $1.60 per share;

(iv) Series B preferred stock convertible into 1,158,209

shares of our common stock;

(v) the November 2019 Senior Convertible Notes, which were convertible into 8,750,000

shares of our common stock (assuming the November 2019 Senior Convertible Notes were converted in full on such date

at the initial fixed conversion price of $1.60 per share);

and (vi) the December 2018 Senior Convertible Note (as

defined below), which was convertible in to 31,250 shares of our common stock (assuming the December 2018 Senior

Convertible Note was converted in full on such date at the initial fixed conversion price of $1.60 per share).

As of December

31, 2019, we also have 2,548,406 shares reserved for issuance, but not subject to outstanding awards, under our long-term incentive

equity plan, and 167,228 shares reserved for issuance under our employee stock purchase plan.

accrued and unpaid interest and installments of principal under the 2019 Convertible Notes and the 2018 Convertible Notes are

due on bi-monthly payment dates as prescribed therein, and are payable at our option in shares of our common stock, subject to

the satisfaction of customary equity conditions (including minimum price and volume thresholds).

The number of shares of common

stock to be issued under these notes may be substantially greater than the estimate set forth in the preceding paragraph, if the

interest and the installments of principal are paid in shares of our common stock, because in such cases the number of shares

issued will be determined based on the then current market price, but in any event not more than fixed conversion price per share

or less than a floor price specified in the notes.

We cannot predict the market price of our common stock at any future date,

and therefore, we are unable to accurately forecast or predict the total amount of shares that ultimately may be issued under

In addition, the number of shares issued under these notes may be substantially greater if we voluntarily lower the

conversion price, which we are permitted to do pursuant to the terms thereof.

issuance of these shares will dilute our other equity holders, which could cause the price of our common stock to decline.

do not intend to pay any dividends on our common stock at this time.

have not paid any cash dividends on our shares of common stock to date.

The payment of cash dividends on our common stock in the

future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition and will

be within the discretion of our Board of Directors.

It is the present intention of our Board of Directors to retain all earnings,

if any, for use in our business operations and, accordingly, our Board of Directors does not anticipate declaring any dividends

on our common stock in the foreseeable future.

As a result, any gain you will realize on our common stock (including common stock

obtained upon exercise of our warrants) will result solely from the appreciation of such shares.

on Form 10-K, nor in any other report or document we file or furnish with and /or submit to the SEC, and any reference to our

website are intended to be inactive textual references only.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business